Doug Scott, loud mouth Geordie entrepreneur living in the Midlands.

Mainframe ICO ( CEO Mick Hagen ) – ICO Transparency Document

Mainframe ICO ( CEO Mick Hagen ) – ICO Transparency Document

Mick Hagen the CEO of Mainframe who are currently doing a public ICO sale has kindly answered these questions, so the public have the information they need to make informed decisions. Thanks Mick for being so open and explaining the changes that have happened at Mainframe and why. The answers have raised more questions which are also shown below, which I have also asked Mick if he can help and answer:

How many years has this company been in existence?

Mick’s reply: 1 month. We created a new Delware C-Corp about a month ago. There was a previous company that many members on the team and shareholders were also part of (that was also a Delaware C-Corp). That company was originally created when we started Undrip and then worked on Spatch. That company was about 6 years old.

How much money has the company raised and over what period?

Mick’s reply: This new company has not raised any money via traditional equity financing. However as you know we’re in the process of our own Token Generation Event. The old company raised just over $5M in traditional equity financing.

How many users did you acquire over this period?

Mick’s reply: In our old company much of our work was on protocols and infrastructure so the idea of “users” wasn’t really relevant. With Undrip I think we had maybe 50k users or so. There was a time when we were working with companies and enterprises — we had a couple dozen that we were working closely with in beta.

Which country is the company registered in?

Mick’s reply:US

What is the citizenship of the founding teams?

Mick’s reply: I’m a US citizen.

Has there been any change in the board of the company in the past 12 months? If so who and why?

Mick’s reply: No. The new entity is brand new. These changes to the Board were required to make sure that we were set up for long-term success. We didn’t want this project to be limited or constrained in any way — especially by a group of preferred shareholders who just didn’t have much experience in crypto or blockchain technology (most of them had invested in us 3+ years ago). We needed to shed some of the legacy baggage that goes all the way back to Undrip (a completely different product).

Has the founding team changed in anyway in the past 12 months? If so who and why?

Mick’s reply: No. It’s a new entity and there have been no changes in the last month. My original cofounder of Undrip (6 years ago) is not with the new company. He left a while ago and we wrote more about it in this blog post

Has there been any change in the shareholders in the past 12 months? If so what and why?

Mick’s reply: All the shareholders from the old company were brought into the new company — with a few changes. All preferred shares owned by existing preferred shareholders were converted to common stock (same class as employees). Preferred shareholder ownership in the new entity has decreased (while core contributor ownership increased). However, to compensate for some of these changes (which many were reluctant to accept at first), they were given a percentage of MFT tokens (with a lock-up/release schedule). Thankfully, every single one of our existing preferred shareholders supported this plan and agreed to it. We spent a lot of time with them communicating why this was important and how it would ultimately be better for them.

Do any of the founding team have any involvement in helping raising finances for other Tokens? Is the person in question regulated to do so? Who?

No, none of us help raise money for other projects. However, some of the team members have participated in other ICOs from other projects from their own personal funds and as personal investors. We’ve only participated in ICOs where we are legally allowed to do so.

I hear you have a syndicate where you raise money for other ICOs, are you regulated to do this?

We aren’t helping raise money for other ICOs. We aren’t promoting these projects and soliciting investment on behalf of them. We are a group of friends who simply pool money together — basically an investment club — and we are participating in ICOs. As mentioned, we use our own personal funds and we only participate where we are legally allowed to participate.

If the ICO is succesful who will control the spends of the money?

Mick’s reply: Our team. People would be trusting us with the funds to make smart and wise decisions. If they don’t believe in our ability to use those funds wisely then they should not participate in the Token Generation Event.

New question: Who is “our team” who legally has control over the spends of the money? What precautions are in place to make sure the money raised is responsibly spent?

New question:What shareholding do you and your brother have of the company?

Can someone please post these into the Mainframe Telegram Group please:

Mainframe on Telegram

Bubbled.io (CEO Andre Voisin ) – ICO Transparency Document

Bubbled.io (CEO Andre Voisin ) – ICO Transparency Document

Thanks to Andre for providing this information so quickly. The only addition I have made is that the hard cap is $12 million.

Company: www.bubbled.io ( for white paper etc please refer to their site )

  1.        How many years has this company been live? Incorporated September 7th 2017 (Company number: 10950676)

 

  1.        How much money has the company raised before? None

 

  1.        How much money are your raising via the ICO – We are launching a crowdsale to sell a minimum of £850k worth of the BBL cryptocurrency ( hard cap $12 million ). The platform mvp has been built so we are selling the BBL token which will enable the users to buy virtual space as described on our website. We have taken the steps to build the product first as stage 1 of our value proposition is enabling the purchase of virtual space.

 

  1.        Which country is the company registered in? United Kingdom

 

  1.        What is the citizenship of the founding teams? Please supply names and citizenship.

Andre Voisin – British, Marc Bohm – German, Nik Ho – New Zealander

 

  1.        Has legal council been sort on whether this will be deemed a Security by the country of registration of the company? Can we see a letter to state this? https://www.bubbled.io/disclaimer/

 

  1.        Has legal council been sort on whether this will be deemed a Security by the country of citizenship of each of the founding team? Can we see a letter to state this? https://www.bubbled.io/disclaimer/

 

  1.        If you received investment before but could not get a product market fit why do they think you will get product market fit with more money? n/a

 

  1.        Is this ICO just an easy way to raise more easy capital as you could not raise more venture capital money? No, we also have an open seed round for shares in the operating company of dapps, Branded and cLand. Our TGE is the first time that the tokens are made available to members of the public which is key to achieving a decentralised solution. To prevent the centralisation of virtual space ownership in the upcoming trillion dollar market of AR, ensuring that all individuals can participate is key to ensure a solution that fits into web 3.0.

 

  1.     How much runway do you have left before you run out of money? 4 months

 

  1.     If you have venture capital funding before are they participating in the Token sale and buying Tokens at the full price? How many tokens are they buying? If they are not buying why not? n/a

 

  1.     How many Tokens are previous investors being given? n/a

 

  1.     How are company shares and Tokens to be distributed among founding team? Can you share the names of every person who has signed the documents to agree to the ICO happening? ICO – Initial Coin Offerings are for coins. Coin is the term used for blockchains or protocols. ITO – Initial Token Offering or TGE – Token Generation Event is the term used for dapps (Decentralised Applications) which are apps built on the platform of a Coin i.e. Ethereum is a coin, Bubbled is a dapp that uses the Ethereum protocol to govern the utility features of its cryptocurrency BBL. Utility functions are the rules that have been programmed into the smart contract and control features of the cryptocurrency i.e. one of BBL’s functions is to transmit information to be appended to the Ethereum blockchain and indexed in bigchainDB.

There are 19,895 shares available (Full Voting Rights) at £25.13 for 10.65% of the operating company which would give a vote power of 16.43%. There is also 10m BBL tokens set aside for seed round participants who receive a % based on investment amount; however these are from company reserves and are frozen for 3 months post TGE and subject to a 24 month vest schedule, all managed by smart contract.

 

  1.     Who was and is on your board now? (A Type Full Voting) Andre Voisin (B Type Non-Voting) Marc Bohm, Timothy Wilson, NiK Ho, Gareth Greenidge, Mark Grob

 

  1.     If there has been a change on the board, who changed, when and why? n/a

 

  1.     Do you have any board members who are not management but external to the company? No

 

  1.     Are these board members incentivised based on the price of the Tokens or via some other mechanism? What are the incentivizes? Company shares

 

  1.     What lock ins are in place for all coin holders, so as to not allow anyone to to become rich without any value being added to the world? The tokens held by team members/advisers are frozen for 3 months post TGE and subject to a 3 year vest

 

  1.     Has the founding team changed in anyway in the past 24 months, ( ie anyone resigned or been fired from the team ), if so who and why? New starters, no leavers

 

  1.     Do the founders have any involvement in any other Token companies, if so which ones, what is your role and why are you involved? Are these Tokens in anyway a conflict to your own Tokens? n/a

 

  1.     Do any of the founding team hold any other Tokens? If so which ones and why? Are these Tokens in anyway a conflict to your own Tokens? We are all holders of various crypto’s but none that conflict with what we are building. We want to explore usage of some with our own offering, ICX and nCash for example.

 

  1.     Do any of the founding team have any involvement in helping raising finances for other Tokens? If so which ones and why? Are these Tokens in anyway a conflict to your own Tokens? No

 

  1.     If you have helped,or are helping other Tokens to raise finance do you need regulatory approval to do so in the country you live in, the country you are a citizen in, the country the ICO is registered in? n/a

 

  1.     What will money raised in the ICO be used for? Achieving targets set out in roadmap and taxable revenue for operating company https://storage.googleapis.com/bubbled-whitepaper/Bubbled_Case_TGE_shortened_2017.pdf

 

  1.     What are the deliverables of the project? Can we see the project plan? https://docs.google.com/spreadsheets/d/1EekX3gp6efoQQgjGsvvLaICmSOTo7zHijJwq_LTuAYk/edit?usp=sharing

 

  1.     What controls are in place to prevent misuse of the money raised via the ICO? Can we see any documents? We are selling a product, so crowdsale not crowdfund. Our seed round for the operating company is open for sophisticated investors who want to invest, they can email us at [email protected]

 

  1.     What data will you produce to your community and when? Not sure what you mean by data – however our land registration tool will be accessible during the pre-sale and main crowdsale where users can pre-register land parcels they want to purchase once they receive their tokens.

 

  1.     What criteria do you believe the project should be deemed a failure? Although we are selling a product we are still adhering to the rules regarding soft cap/hard cap – so not reaching our soft cap would deem the crowdsale a failure; but not the project.

 

  1.     If the project is deemed a failure what are the process’s to return the funds to anyone? If we don’t reach our soft cap we refund all participants.

 

  1.     DistrictOx have already started to offer complete transparency on what they are doing as a company, salaries etc and making the data public on how money is being spent (district0x.io/transparency/). Will you do this? If not why not? This is the right approach to take for companies that are crowdfunding to raise funds to build what they are saying they plan to build. Our model is different – we have built the initial mvp which will be made available to participants as soon as we send their tokens to their MEW for them to start buying virtual land. The revenue from this initial product sale, we hope to utilise to deliver the rest of the business case. Investors in the operating company can request budget spend etc.

 

  1.     Blockstack, a $50,000,000 backed ICO with many established players investing and advising has created a Token sale mechanics where Tokens are released depending upon deliverables of the project. blockstack.com/distribution.p Are you going to do the same? If not why not? n/a

 

  1.     Aragon has a transparency model and each quarter produces reports ( https://blog.aragon.one/why-transparency-matters-d6f9e6e10985 ). Are you going to do the same? If not why not? n/a

 

ICO Transparency Document – Questions to Ask Founding Teams Raising Via an ICO

ICO Transparency Document – Questions to Ask Founding Teams Raising Via an ICO ( work in progress )

ICO’s ( Initial Coin Offerings ) are a step between a private company and a very public one, but currently there are no regulations in place to protect the public, so the public need to find as much information as possible prior to investing into an ICO. For such a reason I have created a list of questions (ICO Transparency Document ) that a founding team can answer and make public:

  1. How many years has this company been live?
  2. How much money has the company raised before?
  3. How much money are your raising via the ICO
  4. Which country is the company registered in?
  5. What is the citizenship of the founding teams? Please supply names and citizenship.
  6. Has legal council been sort on whether this will be deemed a Security by the country of registration of the company? Can we see a letter to state this?
  7. Has legal council been sort on whether this will be deemed a Security by the country of citizenship of each of the founding team? Can we see a letter to state this?
  8. If you received investment before but could not get a product market fit why do they think you will get product market fit with more money?
  9. Is this ICO just an easy way to raise more easy capital as you could not raise more venture capital money?
  10. Has the share table been restructured in the past 12 months? If so what happened and why?
  11. How much runway do you have left before you run out of money?
  12. If you have venture capital funding before are they participating in the Token sale and buying Tokens at the full price? How many tokens are they buying? If they are not buying why not?
  13. How many Tokens are previous investors being given?
  14. How are company shares and Tokens to be distributed among founding team?
  15. Can you share the names of every person who has signed the documents to agree to the ICO happening?
  16. Who was and is on your board now?
  17. If there has been a change on the board, who changed, when and why?
  18. Do you have any board members who are not management but external to the company?
  19. Are these board members incentivised based on the price of the Tokens or via some other mechanism? What are the incentivizes?
  20. What lock ins are in place for all coin holders, so as to not allow anyone to to become rich without any value being added to the world?
  21. Has the founding team changed in anyway in the past 24 months, ( ie anyone resigned or been fired from the team ), if so who and why?
  22. Do the founders have any involvement in any other Token companies, if so which ones, what is your role and why are you involved? Are these Tokens in anyway a conflict to your own Tokens?
  23. Do any of the founding team hold any other Tokens? If so which ones and why? Are these Tokens in anyway a conflict to your own Tokens?
  24. Do any of the founding team have any involvement in helping raising finances for other Tokens? If so which ones and why? Are these Tokens in anyway a conflict to your own Tokens?
  25. If you have helped,or are helping other Tokens to raise finance do you need regulatory approval to do so in the country you live in, the country you are a citizen in, the country the ICO is registered in?
  26. What will money raised in the ICO be used for?
  27. What are the deliverables of the project? Can we see the project plan?
  28. What controls are in place to prevent misuse of the money raised via the ICO? Can we see any documents?
  29. What data will you produce to your community and when?
  30. Who is promoting your ICO? Are they regulated to do so?
  31. What criteria do you believe the project should be deemed a failure?
  32. If the project is deemed a failure what are the process’s to return the funds to anyone?
  33. DistrictOx have already started to offer complete transparency on what they are doing as a company, salaries etc and making the data public on how money is being spent (). Will you do this? If not why not?
  34. Blockstack, a $50,000,000 backed ICO with many established players investing and advising has created a Token sale mechanics where Tokens are released depending upon deliverables of the project. Are you going to do the same? If not why not?
  35. Aragon has a transparency model and each quarter produces reports ( https://blog.aragon.one/why-transparency-matters-d6f9e6e10985 ). Are you going to do the same? If not why not?

This is not a definitive list of question but should give investors in Tokens some extra information to go along with any documents the ICO team produce.

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How to Get Rich from an ICO and maybe not goto Prison

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1. Raise lots of money from loads of angel investors and small vc’s, give them most of shares in my company

2. Do what I want with the money ( skiing baby ). Most investors won’t care as they have small share holdings, make sure to keep them in the dark

3. Build something interesting in the company. Most investors won’t care as they have small share holdings, make sure to keep them in the dark

4. Use some company money to goto ICO events ( in nice places – I am not going any where shit) and meet everyone who is important

5. When I am running out of cash, sack staff and do a recap of the share structure, so I end up with enough shares to control the board. Most investors won’t care as they have small share holdings, make sure to keep them in the dark

6. Wait a little bit of time and announce a Pre ICO. Give the investors some very small number of coins, just incase anyone did care. Most investors won’t care as they have small share holdings, make sure to keep them in the dark

7. Keep most of the coins for myself ( more skiing soon baby ).

8. Persuade some “whales” to buy my coins Pre ICO, who I met on my ICO tour/holiday.

9. Persuade, with coins, some exchanges to list my coins.

10. List on exchanges

11. Pump it when listed on the exchange, everyone involved sells asap, if they know whats going on. I am RICH. The whales maybe get a nice return. The original investors may get some cash back.

12. Avoid the SEC

Making ICO’s Fair, no Flipping

 

F2667

  • old investors, new investors in coins, founders and staff are unable to sell coins for atleast 3 years and only small amounts each year afterwards.
  • staff’s rewards ( salaries etc ) have caps in place so as to not allow them to drain the bank accounts.
  • if it is decided to close down the company with money still in the bank it is returned fairly in some manner to only previous investors and new coin holders.

 

ICO’s, Crypto’s and my Concerns.

ICO’s, Crypto’s and my Concerns.

index

My Background in Crypto

Firstly let me say I am a massive believer in blockchain technology and the possible uses that could advance humanity. Having spent quite a bit of time in the crypto/ICO world over the past 6 months, in Berlin, Zug ( Crypto Valley ), Singapore, Hong Kong and on  The Coinsbank Cruise in Asia I feel I have more of an understanding of the space than many ( but I  am far from an expert ). In these and other locations I have talked to many, many people about anything and everything around the subject, including the impacts on society, the valuations of coins, potential uses, the list is endless. But I have some major concerns that this method of funding is being abused by many.

ICO’s

ICO’s are a new funding mechanisms being used by many in this space to raise finance. It can be a much easier funding mechanisms than traditional Venture Capital methods, but with much less protection for investors. ICO’s are raising $10,000,000 plus many with little product. For these reasons the moral character and execution abilities of the founding teams behind any ICO are of huge huge importance. This issue was recently addressed by Vitalik Buterin, the founder of Etherum. ( Reference )

Screen Shot 2018-02-04 at 00.51.00

 

ICO’s are currently unregulated and many governments are concerned, including the US who have recently begin clamping down on some ICO’s. In December this happened to Tezos (Reference):

Screen Shot 2018-02-04 at 08.20.38

 

Last week:

Screen Shot 2018-02-04 at 08.13.02

Reference

Also be aware that for an ICO to be a true ICO it needs not to classed as a Security. Securities are very heavily regulated globally and the US regulators are beginning to class many ICO’s as Security sales, so be aware, especially if you are a US citizen as founder or investor.
Screen Shot 2018-02-04 at 10.50.31
Coinbase have produced this for reference – securities-law-framework
REALITY AND CONCERNS
A very common practice in the ICO space is this:
  • the Company raises money via a private ICO without the coins being listed on any trading exchange. ( sometimes these are old failing companies who have run out of funding who are just repackaged).
  • the private ICO is executed with syndicates of private investors buying the coins ( unregulated collective investment schemes – which are illegal in many countries ). Many people running these syndicates have been involved in the “scene” for a few years and are very well connected.
  • sometimes these syndicate deals are done with the agreement of the founders and sometimes the founders are completely unaware of what is happening.
  • thus coins are now held between founding teams, advisors and the new investors.
  • exchanges are “persuaded” to list the new coin ( I have no idea what criteria each exchange use to decide if a coin should be listed or not ).
  • prior to the listing on a exchange a marketing exercise is created to create hype round the “new coin”.
  • once listed on the exchange the “new coins” become tradable and the mass market begins buying the “new coin” generally at a premium on the price ( the coin “pops” is the term people use ).

Some of the recent ICO’s have created systems to prevent coins being traded by investors and founders for years and have also decided to not list on exchanges for several years. Thus locking investors and founders into help deliver a product and thus remove speculators, but the amount of ICO’s where this happens is still small.  Once more Vitalik of Etherum,  has shown his concern, and has proposed a potential solution to the speculation issue:

Screen Shot 2018-02-04 at 09.06.40

Reference

CONCLUSION

So before investing in any ICO please check:

  • make sure the ICO is not a security and there is a real need for a coin.
  • make sure the ICO is not just an old failing company repackaged to look pretty for an ICO.
  • ask the founder “what is so different about what you’re doing that requires an ICO rather than usual methods of fundraising?”
  • ask all the early investors, coin holders, founders and board members to state in public (twitter/facebook/linkedin etc) that they believe the team is morally good. ( hence creating a public record incase any regulatory bodies want to investigate if something goes wrong )
  • you believe the team are extremely moral.
  • you believe the team can deliver the project they have described.
  • the white paper explaining the business forces the founders to have very long lock ins and only to become rich if they deliver something of real value.
  • the early investors have no method to quickly “flip” their coins and make a quick profit.
  • the ICO operates in a jurisdiction that has some resemblance of legality ( Singapore and Switzerland are common countries for these to be based in ).
  • Do you have experience building a community?
  • What is your strategy in building, growing and sustaining your community?
  • What is the role of your token?
  • Could not you have just used Bitcoin?
  • Who is your customer base?

I am going to start asking founders who are doing ICO’s to answer these questions and publish them. First one will be in a couple of days. Any questions I should ask?

This is a work in progress document, so please help me and post extra information for me on twitter:

https://twitter.com/doug_scott

Thanks for your time please share this far and wide

 

Doug

Ps. This week I will ask these questions to Mick Hagen to founder of Mainframe.com who is current doing a $30 million ICO

 

 

 

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