BANKEX Community Q&A Week 28

Q: Why haven't you publicized the fact that you’ve developed the smart asset tokenization and run pilot studies with bloggers and influencers? 

A: Tokenization is a complex technology that connects financial, legal, and technological processes. From the technological point of view, we’ve made great progress by achieving almost half of projected development. We have finished the tokenization engine, escrow, security tokens wallet arbitral service, browsing means (BANKEX scan), and many more (refer to the tokenization scheme). The legal part is much more complicated as regulations in different jurisdictions are changing very fast and a way too frequently. The same with finance. Please, consider that only 6 months past the tokensale. So, we made tokenization of water distribution, MediaToken, very complex MovieCoin technology is on the way. Keep following our updates.

Q: So what exactly was sold to investors during Bankex ICO? Since you represented these tokens as Utility tokens, have you in fact sold the token buyers future SERVICES?

A: Correct: we sold access to BANKEX services:

We had the following services available during tokensale:

- Hedging and Trust (https://trust.bankex.com/)

We have these services available now:

- Custody (https://custody.bankex.com/)

- MediaToken (https://mediatoken.bankex.com/)

- WaterCoin (https://water.bankex.com/)

- AppToken (http://apptoken.bankex.com/).

Q: Do you agree that the entirety of the information provided by BANKEX, including but not limited to press releases, business plans private placement memorandum, white paper, roadmap, website content, interviews, and blog posts are part of the contract involving purchase of these future services?

A: Do not agree, since many of that information was generated not by us, but community. BANKEX as a commercial company provides as much information for the public as it allowed by business logic. With that, we also eager to be as transparent as it possible and share some extra information to our community, including tokenholders.

Q: As a seller of services that do not exist yet, do you feel any obligation or responsibility to provide basic transparency and accountability to token buyers and holders?

A: Crypto-based companies are not publicaly traded companies. Although, there are some rules developed by crypto-communities that we obey. For example, community aware of any movement at our token distribution addresses. We are working hard to provide you with all the information regarding the progress of the products. Although token is not stock, so we do not have formal accountability. You can see the updates in our blog - https://medium.com/@bankexcom , telegram channel - https://t.me/BANKEXProtocol, twitter - http://bit.ly/tw_bankex. We could not share all the information due to legal and financial reasons. 

Q: Do you agree that in the case of factual misstatement or failure to state a material fact necessary in order to make statements straightforward, or default on the materially-important obligations that were crucial for BKX-purchasing decisions by investors, those investors should have the right to a full refund, regardless of whether the tokens are or would be considered utility tokens, services or equity/securities?

A: Your question is irrelevant. we did not have investors, since we are selling tokens, not securities. And tokens were sold to be used. If you do not use them, feel free to sell them to people that looking for them through exchanges.

Q: Can you share the Legal Opinion letter written by independent lawyers that provides evidence for your claim that BKX is a utility rather than security Token?

A: We do not have the right to share this letter publicly, this will breach the agreement. For the same reason, you will not find those letters online.

Q: Did this letter also provide an opinion whether the BKX sale in 2017 was subjected to the jurisdiction of SEC or other US agencies?

A: US tokenbuyers were prohibited to participate in tokensale. We made 1500 refunds to people who were identified as US residents or did not pass KYC.

Q: In case you decide not to share this letter or any of its key content with the community, can you please provide a reason for keeping it secret?

A: See point 5.

Q: The publication is signed by Dmitry Dolgov BANKEX Co-Founder and COO. What legal entity is Dmitry Dolgov the COO of, and how exactly is he authorised to produce statements on behalf of the company?

A: As we answered earlier, the market regulations changed drastically during the winter of 2017-2018 and we were compelled to make adjustments, which were solely to protect the interests of the project and our token holders. Since BANKEX is a global company that merges crypto with traditional financial institutions, every listing opportunity is a complex process that must be carefully reviewed and agreed upon by a number of lawyers. We didn't want to put extra risk on our token holders due to regulations uncertainty. We were listed at Bittrex recently, and at the moment, we continue to work on new listings and strive for the best. 

Dmitry is COO of BANKEX. If you need to know more, please contact sign NDA with us and go through KYC and background check process - for security reasons.

Q: Overall, how many legal entities are called "BANKEX", apart from the BKX company registered at Cayman islands mentioned in ICO legal documents? How many of these entities pay their employees from ICO funds? How many of these have produced real revenue? Where does this revenue go, and who are the beneficiaries for all these legal entities?

A: All these information can be disclosed to shareholders or prospective shareholders only. But to keep the community informed - we have entities in Caymans, Singapore, US, Canada, and Switzerland. Apart from that these countries, there are teams who are working for us in Georgia, South Korea, Hong Kong and Japan.

Q: Which company currently holds and controls funds collected by the ICO?

A: Issuer.

Q: What is the governing structure of the company or companies controlling the funds collected as a result of the token sale? Is there any safeguard in the form of a Board of Directors or anything similar that prevents the scenario where one or more of the founders with controlling interest decide that the funds now are their own?

A: Yes, we have budget committee and corporate practices in place.

Q: How many BKX employees are located in Russia, Ukraine, US, Singapore, or elsewhere?

A: 150 employees in total + few hundreds people from community. 

Q: I've heard and read that Bankex is a US company with HQ in NYC. How many BKX employees have a legal right to work in US? Does Igor, Dmitry or any of the other partners have US work permits? Do any of the Bankex companies produce revenue or pay taxes in US?

A: We have all the rights according to local laws.

Q: On page 16 of your business plan, as a part of your token sale marketing, you stated

BKX Token is backed by a crypto-fund: 

• 20 % of capital collected are dedicated to the fund if ICO > $30M; 

• min 25% (average 50%) of fund is held in liquid crypto-currencies, used for short-term market making purposes, to make permanent bid on the exchanges where BKX is traded; 

• max 75% of fund is held in the form tokens issued based on BKX (bought at pre-ICO based on discounted pricing) 

Is this true as of now, does this "crypto fund" exist and act as advertised, or did you abandon this?

A: Yes, cryptofund exists and manages 80% of our capital.

Q: On page 17 of your business plan dedicated to use of funds you've stated that you need up to $20M for IT-company with a run rate $7M per year. You have collected $70M. The other major budgetary outflows mentioned by you in that business plan were 

1.~ $10m - legal engagement and licenses (we need 5-6 jurisdictions, for instance, legal cost of receiving New York crypto license, bitlicense - is about $1m). Will need to become a US broker / dealer to engage in certain trades / activities as a financial counter-party.

2. min $20m - capital to invest in assets issued at our exchange (on pre-ico); 

3. max $20m - acquire local integrators to get access to financial institutions (for instance medium integrator cost at developing market is $20m)

Did you spend any money on these budgetary outflows? What's the high-level overview of your real budgetary outflows for Q1 and Q2 2018?

A: We collected 72 K ether, which is $32M based on today’s rate. We perform all our obligations. We plan to sell equity shares this year to continue to fund our operations and fulfill services.

Q: Finally, on page 18 of your business plan with the Roadmap there were the following key points for first half of 2018. Did any of these happen? What are updated dates for these deliverables? Do you feel the need to explain the delays to the community and refund those who are not happy with the new timing you suggest and the fact that you failed to deliver the services you've sold in a timely manner? 

Q1 2018

• Initial Smart Asset Offering beta version based on the Ethereum blockchains launched.
• Underwriters inclusion to the product mining and worked on interaction method within the Product Mining scheme.
• Launch of cryptocurrency derivatives.

Q2 2018

• Creation of the universal constructor of renewable smart-contracts.
• Tokenization of 5 assets using Proof-of-Asset protocol.
• Token economics validation for assets.
• Cooperation with local Law Firms in NYC and Moscow for corporate, tax, commercial and other necessary advices.
• Engaged in joint strategic partnership with local firms in the foreign market, making cheaper entrance due to already existing brand recognition.
• Establishing connections with partners and providing technical support with the Proof-Of-Asset protocol.

A: Q1 - done

 Q2 - done

• BANKEX KYC Adapter — done

• First Plasma Light commercial implementation — almost done (vending)

• ISAO: First Smart Asset Token Sale — commercial implementation is at the finish (Moviecoin), while ISAO smart-contract was done in February

• Aggregation of necessary licences and permissions — long, drawn-out process

• Making partnerships with banks and exchanges — we are now under NDA and can not give details, follow our updates. 

• Multicurrency TokenSale Engine for fintech community — done.

And many more! Take a look at this infographic:

Q: I appreciate that you've collected a reasonably full list of all IT projects that were supposed to be delivered. I have no doubt that a few dozen great IT developers hired in Moscow and other offices are capable of shipping all this software soon. The real question that bothers me more is whether anyone other than developers would care, use these products and generate any meaningful revenue and demand for BKX.

A: We already receive a significant revenue stream through private b2b sales (companies agree to use our product and services even in alpha or beta stages). As for the publicly announced products — when the beta testing is done some of the services, custody for instance, will be available for the general market and will explicitly generate BKX token demand. It is important to understand that any technology can not be used widely if it's missing a stage: development, alpha-testing, beta-testing, limited release, release.