Simcord lied about support from the Ukrainian government to advertise its mining pool

On December 11, a round table was held in Kyiv on the topic “Standards for blockchain tools.” Among the departments allegedlythose who supported him were indicated by the Ministrydigital transformation, Ministry of Justice and Ministry of Economic Development, Trade and Agriculture. At the same time, during the event, the digital asset Bitbon from the company Simcord, which has signs of a financial pyramid, was advertised. The vice-president of the «Blockchain of Ukraine» Association wrote about this on Facebook. Vitaly Bulychev.

False support

The round table was organized bypublic organization «Research Center for Legal Solutions in the Application of Distributed Registry Technologies». The advertising focus of the event becomes obvious when you consider that it was moderated by the CEO of Simcord, Alexander Kud, and the speakers were his colleagues.

Some speakers:

Representatives do not appear on the list of speakersministries declared at the stand. Perhaps the organizers ranked them as the former first deputy minister of justice of Ukraine Elena Sukmanova and former prime minister Yuriy Yekhanurov. ForkLog requested a comment from ex-officials with a request to confirm their participation in the round table, but has not yet received a response.

The Ministry of Digital Transformation of Ukraine has not previously confirmed the relationship of the department with the round table. An official comment from the minister will follow later.

First Deputy Minister of Justice of Ukraine Olga Onishchuk told ForkLog that she was hearing about this event for the first time.

Mining with a yield of 10,000%

Simcord representatives did not answer ForkLogto the question whether the ministries provided support for this round table, and redirected us to the Research Center, indicating that they were the organizers of the event(they later sent an e-mail with explanations - see UPDATE). Although the event’s Facebook page states otherwise:

Answering ForkLog's question about the contentSimcord's speeches at the round table, a representative of the company's PR department said that they covered two topics: «The prospect of attracting significant investments in the Ukrainian economy in the next 10-15 years, subject to the timely and effective organization of state regulation of the market of goods and services based on blockchain technology» and «Legal nature of the blockchain token».

The PR woman also said that following the results of the event, it was decided to develop a «Doctrine of economic and legal regulation of the market for goods and services on the blockchain»:

Roundtable Final Protocol by ForkLog on Scribd

Judging by the available photos from the event anda previously published statement by the CEO, Simcord is now preparing to launch mining. At the round table, they presented the principle of building mining pools in the Bitbon system.

The structure of the mining pool is divided into four levels, each of them promises its participants a certain profitability - from 10% to 100%.

It is noteworthy that at a cost of one Bitbon of $ 500, fourth-level participants are promised a return of 10,000%.

The Bitbon system separates two types of mining:«Consensus Mining» and «Mining infrastructure support». Although in the general understanding of this term, neither one nor the other is mining.

«To make money by mining in the systemBitbon does not need to purchase all kinds of additional equipment (processors and video cards with high computing power, mining rigs, etc.). Consensus mining uses the Delegated Proof-of-Stake algorithm, which has been seriously improved and differs from those that already exist on the market. Each Bitbon owner will be able to participate in mining and receive a constant income in an amount that will directly depend on the number of Bitbons available in his Assetbox electronic wallet.

The company gives the following diagram:

«The miner’s own power is calculatedfrom the number of Bitbons on the Assetbox wallet. Basic power - the number of Bitbons on Assetbox + the number of Bitbons from the people you personally invited from the first line. Social power - the number of Bitbons on Assetbox + the number of Bitbons of invited people + the number of Bitbons of people in the second line and below. All this is called a miner's pool.

Thus, early investors «mine» your income from the funds of later investors.

White paper and crowdsale Simcord

According to the project white paper, Simcord is engaged in«development and production of high-load software solutions based on blockchain technology, which are based on scientific developments and patents in the field of managing property rights to assets through contribution».

“Bitbon is the first financiala crypto tool secured by assets of the real sector of the economy. The underlying economic model of the contributing system is guaranteed to stimulate cyclical demand and supply for Bitbon, ”- note company representatives.

In the summer of 2018, the company launched an ICO, duringwhich planned to sell 70 million Bitbon tokens at a price starting from $6. Further changes in the price of the asset were calculated using a certain “special formula” depending on the number of Bitbons purchased.

At the final stage of the public crowdsale, Simcord announced the Golden Price promotion.

«The agreement provides for conditions underin which the company will be able to buy back each client’s Bitbon at a price of $100, as a result of which the client’s guaranteed minimum profit will be up to 320% per annum or 1600% at the end of the option agreement on October 11, 2023,— were the terms of the campaign.

In addition, the company promised Bitbon buyers an option premium of 3% of the number of tokens they purchased. Now the total offer of Bitbon tokens is 100 million.

Expert Opinion

ForkLog asked blockchain expert Pavel Kravchenko, who visited the round table on his own initiative, to comment on the presentation of Simcord.

«If there is a fixed number of tokens,and they are required to carry out transactions in the system and at the same time are an investment mechanism, which is confirmed by the screenshots above, this is a utility token model, and in any case it is subject to pumps and dumps.

Simcord claims that their token — Thisa digital asset backed by intellectual property. In this way they are trying to prove that it absolutely complies with the law. But no matter how much lawyers try to justify this model, if a token is both an investment and payment instrument, then a pump and dump is possible.— Kravchenko said.

According to him, the round table brought together«lawyers and politicians friendly to Simcord who spoke positively about them». The ultimate goal is to gain the support of various public organizations and enter parliament with a draft law on digital assets.

«It’s difficult for me to say whether Simcord is a pyramid, but based on the screenshot, signs of a pyramid are present there»,— added the expert.

Certificate from false legislators

«We initially laid down the legal natureBitbon systems are adaptive legislative regulation, which is an important indicator of value in the context of the development of the global information economy. All activities of participants in the Bitbon system occur exclusively on the legal plane, which ensures the legality of all processes»,— says on the Bitbon website.

Bitbon token has many different documents, supposedlyconfirming its legality - from an inventory passport to scientific and legal opinions signed by the National Academy of Law Sciences of Ukraine (by the way, it includes the previously mentioned round table moderator Nikolay Kucheryavenko). But we will focus on one of them.

December 7, 2019 LLC «Simcord»received from the already familiar Research Center for Legal Solutions in the Application of Distributed Ledger Technologies a certificate of compliance of the Bitbon blockchain token with a digital asset.

«This certificate certifies that the tokenThe Bitbon blockchain corresponds to all categories of a digital asset, namely, it is an information resource derived from the right to value, circulating in a distributed registry in the form of a unique identifier»,— says the center's conclusion.

A research center was established bythe results of the panel discussion “The Future of Digital Assets: A Financial and Legal Perspective” held during the third Kharkiv International Legal Forum in September 2019. Its founder is (drum roll) CEO Simcord Alexander Kud.

Final Protocol by ForkLog on Scribd

According to the document, the center is implementingblockchain technology in public administration, as well as the development of regulatory documents governing the use of blockchain technology in Ukraine.

However, according to the head of the group of advisersof the parliamentary inter-factional deputy association Blockchain4Ukraine Konstantin Yarmolenko, this public organization is a «noname» and is in no way involved in the preparation of new bills on the topic of distributed registry technology and virtual assets. The president of the Blockchain Association of Ukraine, Mikhail Chobanyan, has also heard nothing about the center.

In addition, Yarmolenko drew attention to the fact that the state emblem of Ukraine is used in the logo and seal of the center, which is the prerogative of only state bodies.

«Article 11 of the Law «On Statecoat of arms» directly prohibits its use by public organizations. Specifically in this situation, these actions may be part of fraud»,— Artem Afyan, managing partner of the law firm Juscutum, said in a comment to ForkLog.

The opinion of a lawyer

In general, Afyan called the last round table “one of the most cynical imitations of state support that he has seen recently.”

«People who signed documents withanalysis of the Simcord blockchain network, are legal experts. This is a little strange, because personally, as a lawyer, I would never undertake to analyze the network without technical specialists. I was also confused by the statement that their token complies with the definition of a digital asset, although this term is not legally enshrined in Ukraine»,— stated the lawyer.

Afyan suggested that not all participantsevents could be in the know about his real purpose. As an example, he named the famous intellectual property specialist Elena Orlyuk. She wrote about her participation in a roundtable on Facebook.

«Obviously, such people were simply used: they were not fully told where they would participate, so they came and with their presence seemed to betray the significance of this event»,— Afyan says.

ForkLog is awaiting comments by Elena Orlyuk about who exactly and for what purpose invited her to this event.

«So far I have no reason to say thatThis is a pyramid, but the force with which they are trying to give credibility to this project, which no one in the technology and cryptocurrency community knows about, and in general the aplomb of this round table - indicate the risk that this is a pyramid scheme.— Artem Afyan summarized.

Suspicions of members of the forum

At Simcord-related topic forums, some users talk about negative experiences with the company.

Similar reviews exist on the activities of Cypriot broker UBK Markets, a subsidiary of Simcord. In the UBK documentation, Alexander Kud appears as an executive director.

The facts provided by ForkLog are taken from publicly available sources. The editors are open to comments from representatives of Simcord.

UPDATE:

After the release of the material, representatives of Simcordsent the editors of ForkLog a letter in which they reported that the National Academy of Legal Sciences of Ukraine sent to the Ministry of Digital Transformation of Ukraine addressed to Fedorov M.A., an official letter of invitation to the round table “Standards of Blockchain Tools” with an offer to personally take part in it and delegate relevant specialists from the ministry. The letter was registered in the office of the ministry dated 10/04/2019, reg. number No. 34300/0/1-19.

«The support of the Ministry of Justice wasdesignated on the following basis: the round table “Standards of Blockchain Tools”, which took place on December 11 in the Ukrainian House, is an official continuation of the panel discussion “The Future of Digital Assets: A Financial and Legal View”, which was held within the framework of the III Kharkiv International Legal Forum, which was enshrined in the minutes of the panel discussion. The forum was held with the support of a number of organizations, companies and ministries, in particular the Ministry of Justice, information about which was posted on the official information resource of the forum and, accordingly, was transferred to the information resources of the round table»— they explained in a letter.

UPDATE 2:

The event’s website began to clean up the list of ministries whose support was announced.

Compare, this is how the site looked before the release of our publication: