The information document relating to the ICO and the Token Friendz (the so called White Paper) – which was never approved by CONSOB, and it was made available to investors, inter alia, through the website friendz.io, social network and with a messaging app – forecast to investors the raising of FDZ price value because of certain operations that would be done by the issuer and the offeror:
- the listing of the Token FDZ on the secondary market (on the so-called exchanges);
- the Buy-Back mechanism, the issuer and the offeror would purchase the Token FDZ on the secondary market;
- Token FDZ would be added into the business model of the companies e.g. digital marketing and advertising.
The public offer of Token FDZ was not registered under the applicable financial market laws of Italy, but the White Paper and the communication constitute, advertise and relate the ICO for the sale of and the solicitation of an offer to buy the Token FDZ and it was aimed directly to Italian investors. In fact, the issuer and the offeror created an Italian group on the messaging app called Telegram, the so called “Friendz ICO Italian Group“, they used the messaging app group in order to advertise and give specific information to Italian investors relating to the ICO and the FDZ.
Pursuant to the White Paper, 1.5 billion of Token FDZ we created before the ICO, and up to n. 600,000,000 would be offer during the Initial Coin Offering. Moreover, following an established practice in relation to the ICOs, the remaining Token FDZ were sold on a private sale.
The price value of the Token FDZ would be “stable” because of the Buy-Back mechanism. In fact, the issuer would purchase the FDZ on the secondary market in order to control the liquidity and the price value of the Friendz Token. Moreover, the issuer, through the Buy-Back mechanism, aims to affect the Token’s demand increasing its “scarcity“.
The Token FDZ offered during the ICO were subject to certain conditions concerning Friendz Token transferability (e.g. lock-up), which means that the investors, after the purchase, were not allowed to immediately sell the FDZ on the secondary market. The purpose of the lock-up condition was to prevent the falling down of the FDZ value.
Investors would collect and obtain Token FDZ:
- to purchase digital marketing services offered by the issuer;
- to purchase goods from third parties on the website “Friendz”;
- as a compensation for certain in-app actions;
- to make an investment on a “financial product” listed on the secondary market (e.g. on the exchanges).
Through the ICO, the issuer collected more than € 24 million, but after the ICO many Italian investors complained with companies’ communication and actions alleging the breach of contract (e.g. White Paper and T&C). Taking in consideration the White Paper, investors claimed that the issuer did not (i) develop its business model adding the blockchain technology in order to offer new services, and (ii) carry out the Buy-Back mechanism in order to control the liquidity and the price value of the FDZ on the secondary market.
According to the reports on “Coinmarketcap”, after the listing, the Token FDZ have lost more than 94% of the price value compared to the initial listing price.