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Commercial, International

INTERNATIONAL E-COMMERCE, COMMERCIAL AGREEMENTS, CRYPTO PROCEDURES, DATA PRIVACY COMPLIANCE, CONFIDENTIALITY, FINTECH, IT, ETC.

June 22, 2020

Legal Opinion: PBLC TOKENS

Introduction
This Legal Opinion was prepared upon request of PUBLICAE an organization with the residential address at
Øvre Strandgate 21, 6005 Ålesund Norway, Org Nr. 920447325 (the Organization), to serve as a legal anal-
ysis of the business model, the PBLC Token (Token) and its compliance with the requirements of the Listing
Rules for the Trading Venue operated by Exchanges.

This Opinion is meant to serve as our legal analysis of the PBLC Token and conclusions are limited to the
matters expressly stated herein, are fully based on information and material provided to us by PUBLICAE,
and no opinion or conclusion is to be inferred or may be implied beyond the opinions and conclusions ex-
pressly set forth herein. This Opinion is written in good faith, and cannot be deemed as guarantee or obliga-
tion, or ground of liability of our Legal Office.

For the purposes of issuance of the Opinion we have assumed without further inquiry that all factual cir-
cumstances stated in the provided documentation are a true and correct representation of actual circum-
stances surrounding the Organization and insofar as such factual circumstances are not or may turn out to
be not true and correct, they will have no adverse effect on the opinions stated herein.

We hereby state that our Law Office is EU based, and the interpretation of law is based on authority for
Exchanges incorporated in the Unites States of America, the European Union, Australia and other relevant
international areas, as described below.

Business description. Key features.

As a concept, PUBLICAE is a Norwegian registered Non-governmental organization dedicated to political
neutrality through impartial working towards establishing an unbiased & fair political advertising platform.
Benefitting from the innovation in Blockchain Technologies. PUBLICAE intends to meet an increased need
for attention allocation techniques that enable more effective competition among national political rival en-
tities, both individual and organizational.

Through the official PUBLICAE platform, organizations can enjoy higher levels of effective outreach in se-
lected demographics and lower costs for their advertising campaigns maintained by the Politicoin utility
token. Their value proposition offers less dependence on external publishers and advertisers. Platform us-
ers are less likely to settle for alternative mass-market solutions, as distributed wealth creation on the PUB-
LICAE platforms intends to create incentives that will secure user retention.

The PBLC Token

First of all, what is a PBLC Token? As stated on the website, Politicoin (PBLC) is an ERC-20 compliant
token. The PBLC token leverages Ethereum’s decentralized, secure, transparent and verifiable infrastruc-
ture serves as a medium for the value exchange on the PUBLICAE platform. PBLC serves as a unit of value
between organizational advertisers and users, a utility token facilitating outreach efforts. PBLC can be
stored on compatible various Ethereum non-custodial wallets like: MyEtherWallet, MetaMask and in the
internal wallet of the PBLC Wallet mobile app (released on Q2 2020) for iOS & Android.

PBLC Wallet. Politicoin token means the total satisfaction that is received by the consumption of the PUBLI-
CAE service. The utility token revenue model drives the functionality of PUBLICAE platform
within which the wallet features will serve an integrated fundamental role.
The PBLC tokens can help the advertisers and users to trade value within the ecosystem. The PBLC Wallet
iOS and Android app uses an already deployed contract in Ropsten, Rinkeby and Mainnet, called Politicoin

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(PBLC). It’s built using the latest Google's UI toolkit Flutter and mobX for state management, along with
other useful packages.

Token Supply API

50% of total supply is issued at beginning for Circulating Supply which consist of the Public Token Sale pool.
Of the remaining 50% owners token pool; 60% is locked for development and employee vesting, 20% for
financial backers and early supporters through bounty programs and rest 20% for operations, legal, vesting
advisors and capital reserve. Circulating supply equals total supply 31Billion tokens minus Circulating Sup-
ply.

Token Sale Allocation

To help in the rapid development of the PUBLICAE platform, the funds will be allocated as following:
60% of the token sale will be used for software development and R&D of the PUBLICAE platform. This sub-
stantial allocation will help the developers to accelerate its development and enable them to hit key mile-
stones in a timely fashion. 20% will be used for marketing initiatives to spread awareness about the project
as well as for community development. The PUBLICAE team hopes to grow its ecosystem by on-boarding
new participants through various marketing activities. These efforts will be supplemented by community-
driven events that aim to help community growth and engagement. To ensure that enough resources are
available for the smooth operation of PUBLICAE, 20% of the proceeds of the PBLC token sale will be used
for the operational, legal expenses, and overhead.

Use Case
Political parties will be able to use Politicoin to purchase media placeholders to influence the political opin-
ion of the electorate in their favor. On the other hand, also Non-governmental organizations can spread
awareness about their initiatives to gain support by donations or to achieve recognition for their cause.

During PUBLICAE campaigns, Politicoins will get distributed between the users as compensation for receiv-
ing and viewing content or as donations. In other words, users can earn PBLC for the attention they give to
campaigns. They can then choose to withdraw their Politicoins from their mobile PUBLICAE token internal
wallet or donate some of their earned PBLC in support to any organization of their choice. PBLC tokens are
not refundable and are not intended to be a stable digital currency, securities, commodities, or any other
kind of financial instrument.

United States of America

From a US legal standpoint, the institution of “securities” is being regulated by section 2(a)(1) of the Secu-
rities Act of 1933, which defines them as: “…any note, stock, treasury stock, security future, security-based
swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-shar-
ing agreement ... investment contract ... or, in general, any interest or instrument commonly known as a
‘security’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.”

In order for us to have a deeper understanding of the issue under debate, we should take into consideration
the US Supreme Court case SEC v. Howey, 328 U.S. 293 (1946), which provides further clarifications on de-
termining whether an instrument meets the definition of security, or not. In this Supreme Court case, Howey
focuses specifically on the term “investment contract” within the definition of “security”. Obviously, not
every contract or agreement is an “investment contract”.
The Court determined that a contract constitutes an investment contract that meets the definition of “secu-
rity” if there is:
1. an investment of money;
2. in a common enterprise;
3. with an expectation of profits;
4. solely from the (entrepreneurial or managerial) efforts of others (e.g., a promoter or third par-ty);
The four factors must be met all together, in order to be legally considered “security”. Because this Supreme
Court Decision is widely considered as fundamental to the determining elements of a “security”, we will base
our analysis its conditional factors.

1. Is this an investment? Yes! It is generally accepted that an investment of money may include not
only the provision of capital, assets and cash, but also of goods, services or of promissory notes. PBLC is
being distributed through a token offering by the issuer PBLC to purchasers with a price set per token, so
the first factor is actually met.
2. Is this a common enterprise? A common enterprise is deemed to exist where investors pool funds
into an investment and the profits of each token buyer correlate with those of the other investors. Whether
funds are pooled appears to be the key question, and thus in cases where there is no proportional sharing
of profits or pooling of funds, a common enterprise may be deemed not to exist. PBLC is unlikely to be
deemed a “security” at this stage of development due to the fact that the PBLC platform is not operational.

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There is no pooling of funds at this stage. Therefore, at this stage of development, PBLC is substantially a
utility coin consumed to transfer value across the Ethereum blockchain with a relatively stable value across
various ex-changes. The second factor is not met.
3. Is there an expectation of profit? In our legal opinion, this factor is irrelevant to the matter, but we
will analyze it in respect of the Supreme Court Decision. From an economic point of view, any type of invest-
ment is made with an expectation of profit. But just because there is a return on investment or profit, does
not mean that the investment contract is a “security”. Moreover, the main purpose of PBLC is creating a is a
multi-blockchain platform. So, the expectation of profit is mainly oriented towards another category of eco-
nomic activities, not on PBLC Tokens, which renders somewhat irrelevant the profits from the eventual To-
ken Sale. Even so, this factor is probably met, on a low scale, provided that PBLC is purchased by investors
with an expectation of capital gain, even though we clearly express the opinion that this factor should not
weigh in decisively on the matter.
4. Is there the “solely on the efforts of others” factor met? No! The profit of the platform user al-ways
depends on his own actions. As we said, even though there is also an investment in PBLC Tokens, the expec-
tation of profits results mainly from the economic activity, not from the volatility of the Tokens. So, any such
incentives should ideally be derived through their own efforts, rather than through a passive investment. In
such a case, the factor is not met.

Canada.
This section sets forth our firm’s legal opinion as to whether the PBLC token sale would likely constitute a
security offering for purposes of Canadian securities law.
The leading Supreme Court case for determining whether an instrument meets the definition of security is
Pacific Coast Coin Exchange v. Ontario Securities Commission. The Court articulated a test similar to the
Howey test in the United States. The test is as follows:
(i) an investment of money;
(ii) in a common enterprise;
(iii) with the expectation of profit;
(iv) to come significantly from the efforts of others.
Most recently, the Canadian Securities Administrators (“CSA”) released guidance on treatment of
cryptocurrency offerings and revealed that tokens that function like securities under the Pacific Coast test
will be treated as such. The securities laws of Canada will apply if (1) the person or Organization selling the
securities is conducting business from within Canada; or (2) if there are Canadian investors.
Here, if the PBLC token sale were found to be a securities offering, it would need to comply with the securi-
ties laws of Canada since it allows for Canadian investors. However, applying the Howey analysis above,
PBLC tokens do not appear to be securities under the Pacific Coast test, and, thus, Canadian securities laws
are not triggered.

European Union and UK

From a EU and UK legal standpoint, when we conducted a detailed decomposition and analysis of all online
PBLC Token business processes, we were unable to detect and identify any process that can be regarded as
a relationship between an investor and an Issuer of securities. On the other hand, if we aim to register the
issue of securities, we will not be able to prove to the regulator body that tokens are securities. Moreover,
the main token holders are interested in participating in the trading of transactions, and this is peer-to-peer
mainly.

By our opinion, the expertise of PBLC Token under the EU securities legislation cannot be applied to PBLC
Token due to the fact that all business processes and relationships between platform users are traditional
relationships between buyers and sellers. There is no contribution to any business venture.

Nowadays, the matters of cryptocurrency turnover and production of digital assets has not special legal
regulation. There are neither special laws, nor separate legal Institute or branch of law. Therefore, we cannot
qualify a token as a unique legal essence.

The next important legal matter is the market price of token does not influence on a Organization profit and
the Organization profit does not influence on the token market price.

There are no declarations in Whitepapers promising "Expectation of Profits" to token buyers. Token holders
can receive any income from token by their own efforts, or they can also lose the tokens while trading.

PBLC Token is clearly not greenhouse emission allowances.

PBLC Token does not constitute any sort of debt obligation (see the functions listed at II above).
For essentially the same reason an PBLC Token is not a bond or other tradable debt obligation.

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PBLC Token does not constitute a share because it neither entitles its holder to a dividend nor grants its
holder any right to participate in the governance of Reckon Limited of any other Organization.

PBLC Token is not a subscription right or other tradable right granting the right to acquire securities. A PBLC
Token simply does not give its holder any option to acquire a bond or a share.

The Organization does not propose to use the monies received from the sale of PBLC Tokens for following
any defined investment policy for the benefit of the buyers of PBLC Token in question and in their common
interests: the buyers of PBLC Token will not have distributed to them any income earned as a result of op-
erating the platform.

A derivative security comprises a tradable security expressing a right or an obligation to acquire, exchange
or transfer, provided that its value depends, directly or indirectly, on:
1. the exchange or market price of a security;
2. on any interest rate;
3. securities index, other financial index or financial indicator, including the inflation rate, freight rate,
emission allowances or other official economic statistics;
4. currency exchange rates;
5. credit risk and other risks, including climatic variables;
6. the exchange or market price of a commodity.
PBLC Token does not represent any of such cases.

While the value of an PBLC Token would likely depend on the success of the ecosystem, the content available
via that ecosystem does not constitute a commodity. Thus, an PBLC Token is neither a derivative security
nor a derivative contract.

Finally, PUBLICAE are likewise not depositary receipts. A depositary receipt is a security that represents
ownership of the securities of a foreign issuer and which can be admitted to trading on a regulated market
independently of the securities of the foreign issuer. To constitute a depositary, receipt an PBLC Token
would need to represent an ownership of a security. All the functions of an PBLC Token are listed above. An
instrument fulfilling only those functions does not constitute a security.

Australia
With regard to financial regulation and consumer protection matters arising from digital currencies, the
report states that the RBA “considers digital currencies are currently in limited use and do not yet raise any
significant concerns with respect to competition, efficiency or risk to the financial system; and are not cur-
rently regulated by the RBA or subject to regulatory oversight.” However, the RBA indicated that it “would
be assessing whether the current regulatory framework could accommodate alternative mediums of ex-
change such as digital currencies.”

The report also set out the view of the Australian Securities and Investments Commission (ASIC) that digital
currencies “do not fall within the legal definition of ‘financial product’ under the Corporations Act 2001
(Corporations Act) or the Australian Securities and Investments Commission Act 2001 (ASIC Act).” The
Committee noted the existing warning to consumers on ASIC’s MoneySmart website, discussed further in
Part II(B) below, which states that virtual currencies are not regulated and have less safeguards, values can
fluctuate wildly, a person’s money can be stolen, and that they are popular with criminals.

The Committee noted that ASIC’s approach to digital currencies had been described in a November 2014
report by its oversight committee, the Parliamentary Joint Committee on Corporations and Financial Ser-
vices. That report stated that ASIC was monitoring developments, considering how legislation it administers
might apply, and consulting other Australian regulators (including financial regulators and law enforcement
agencies).

The Committee expressed that, although ASIC does not consider digital currencies to be currency or money
for the purposes of the ASIC Act or Corporations Act, “the general consumer protection provisions of the
Competition and Consumer Act 2010 apply to digital currencies.”[20] This Act is administered by the Aus-
tralian Competition and Consumer Commission (ACCC), which the Committee noted does not include warn-
ings about digital currencies on its own website dealing with consumer protection.

Chapter 5 of the report then discussed whether digital currency should be treated as a financial product for
the purposes of the Corporations Act and ASIC Act, as well as how digital currency payments fit within the
current payments system regulations. ASIC advised the Committee that extending the definition of financial
products to include digital currencies “would not be straightforward as the decentralized framework means
that the normal obligations on product issuers cannot be imposed.” In addition, a number of industry par-
ticipants, including overseas entities, may be required to obtain relevant Australian licenses as they would

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be providing financial products, which may cause difficulties to digital currency businesses and to ASIC. ASIC
did note that some digital currency businesses offer facilities, such as non-cash payment facilities, that may
already be considered financial products.

The Committee simply recommended that further research be conducted before any changes are made.

As a consequence, ASIC does not consider cryptocurrencies to be financial products under the ASIC Act or
Corporations Act. ASIC’s MoneySmart website provides information on virtual currencies, including how
they work and different types, and sets out various risks associated with buying, trading, or investing in
such currencies. This includes statements that “the exchange platforms on which you buy and sell digital
currencies are not regulated, so if the platform fails or is hacked, you will not be protected and will have no
legal recourse”; a cryptocurrency is not guaranteed by any bank or government” and “investing in virtual
currencies is considered highly speculative, as values can fluctuate significantly over short periods of time”;
and “if hackers steal your digital currency you have little hope of getting it back.”

A separate page provides information about initial coin offerings (ICO), which ASIC calls a “high-risk specu-
lative investment.” It advises investors to check whether an ICO issuer is a Organization registered in Aus-
tralia and whether it is a licensed financial services provider, noting that “if the Organization is not regis-
tered and does not have a license in Australia you will have little protection if things go wrong. But even if
the Organization is registered in Australia, or has a license, there are risks associated with investing in ICOs.”

Applying to the context of the analysis above, the sale of PBLC tokens does not appear to trigger the ASIC
securities laws since the PBLC tokens function as utility coins rather than representations of equity or debt
interests.

Republic of Singapore.
This section sets forth our firm’s legal opinion as to whether the PBLC tokens would likely constitute an
ownership interest in PBLC `s assets or property for purposes of the Securities and Futures Act.
Following the SEC’s DAO Report, Singapore’s financial regulatory body and central bank, the Monetary Au-
thority of Singapore (“MAS”), clarified its own position and treatment of token offerings. The statement in-
dicated that the offer or issue of digital tokens in Singapore will be regulated by MAS if the digital tokens
constitute products regulated under the Securities and Futures Act (Cap. 289) (“SFA”).
Specifically, where digital tokens fall within the definition of securities in the SFA, issuers of such to-kens
are required to issue and register a prospectus with MAS before the offering of such tokens, unless otherwise
exempted.

Digital tokens may be securities subject to the SFA where they represent ownership or a security interest
over an issuer’s assets or property and may therefore be considered an offer of shares or units in a collective
investment scheme.

However, the MAS guidance leaves open the possibility that not all token sales are subject to the SFA and
that some token sales may be distinguishable from equity or debt interests in the issuer or its assets. To
date, MAS has not explicitly declared that SFA applies to utility tokens. Thus, similarly to the SEC regime,
there appears to be an implied carve-out for utility tokens.

Here, applying the Howey analysis above, the sale of PBLC tokens does not appear to trigger the SFA secu-
rities laws since the PBLC tokens function as utility coins rather than representations of equity or debt in-
terests.

China
This section sets forth our Legal Office’s legal opinion as to whether the PBLC token sale will be lawful in
China. In 2017, the People’s Bank of China (“PBOC”) has announced that virtual currency transactions are
“unapproved” illegal activities. The announcement is functionally an indefinite freeze on all Token Sales and
token sales. The ban applies regardless of the characterization of the tokens.
In late October, the global crypto market surged after Chinese President Xi Jinping said the country should
“seize the opportunity” blockchain technology presents. It is predicted that China could start rolling out its
state-backed digital currency as early as the next two to three months. Government grants have been set up
to help blockchain projects. For example, Guangzhou’s city government launched a 1 billion yuan (about
$140 million) subsidy fund to support development of the blockchain industry. Even so, it is noted that, at
least for the moment, only the state backed blockchain cryptocurrencies will be accepted, and as such, mar-
keting or selling PBLC tokens to Chinese citizens would be unlawful.

India
As the law currently stands, there is no clear definition of virtual currencies, crypto assets or cryptocurren-
cies in India. The single regulation directly on the subject of virtual currencies is a circular (the VC Circular)

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issued by India's central bank, the Reserve Bank of India (RBI), which restricts the use of regulated banking
and payment channels for the sale and purchase of virtual currencies. The VC Circular is currently under
challenge before the Supreme Court of India on constitutional grounds.

In July 2019, an Inter-Ministerial Committee established by the Ministry of Finance released a report on a
proposed regulatory approach towards distributed ledger technology and virtual currencies. The commit-
tee has recommended an outright prohibition, along with criminal penalties, on dealing with virtual curren-
cies. It has also recommended the promotion of distributed ledger technology without the use of virtual
currencies, and the exploration of a sovereign digital currency. The committee's recommendation is non-
binding and is currently under consideration by the government.

Currently, there is no express law that classifies a virtual currency as a good, service, security, commodity,
derivative or currency. The categorization of virtual currencies into one or more of these stated classes is
important, as the existing law would apply differently based on the categorization.
As the law currently stands, virtual currencies in the nature of Bitcoin and Ether are unlikely to attract reg-
ulations relating to securities. The Securities Contracts (Regulation) Act 1956 (SCRA) provides a non-ex-
haustive definition of securities, and there is currently no regulatory guidance on its application in the vir-
tual currency context. Virtual currencies do not fall within the enumerated items of the definition. Further,
the items under the definition derive their value from an underlying asset.

However, some tokens (although not all) issued through initial coin offerings (ICOs) may fall within the am-
bit of the SCRA if they are issued from an Indian entity and meet the above tests. This is likely to be the case
if they are issued by an identifiable issuer and are backed by the underlying assets of the issuer. Such tokens
should be subject to regulation under the Companies Act 2013 (the Companies Act) (in respect of require-
ments surrounding the issuance and transfer of securities) and the SCRA (in respect of securities only being
allowed to be listed on licensed stock exchanges).

Some issuances of virtual currency tokens may also amount to collective investment schemes, which are
regulated under the Securities and Exchange Board of India Act 1992.

For the above stated reasons, for the moment we do not recommend targeting of Indian customers.

Cyprus.
Unlike many other EU members, Cyprus has decided to stay aside and so far in any way not responding to
the Token Sale.

In Cyprus it is allowed to own bitcoins, buy them, extract and change. Cyprus charges income tax on all types
of profit for both individuals and legal entities; but individuals may exclude income derived from the sale of
securities, therefore, classification (in this case) is key. As for the increase capital from trans-actions (ex-
changes), Cyprus pays only the tax on income from the sale real estate. (In addition) schools and universities
of this state favorable to payments in bitcoins...". In this aspect, of course, Cyprus is set a positive, but regu-
latory enforcement is still virtually absent.

In October 2017, the Commission on securities and stock market of the Republic of Cyprus (CySEC) clarified
the requirements for investment companies operating in the country (Cypriot Investment Firm, hereinafter
— CIF) in the provision of services related to virtual currencies and derivatives in which it acts as a under-
lying asset, in particular, with contracts for difference prices (Contract for Difference, hereinafter — CFD).

In the EU, there is no direct regulation of the turnover of virtual currencies or derivatives in which they are
the underlying asset. There is no common understanding of how the provisions of Directive 2004/39/EC on
financial instrument markets apply to them.

CySEC has actually localized the procedure for providing investment services related to virtual services,
pointing to the need to conduct legal checks for compliance of such investment products with the estab-
lished requirements in each jurisdiction.

Malta.
At the moment, in Malta, the cryptocurrency market is mostly unregulated. These confirmations have so far,
just reiterated the fact that the bitcoin business and related industries are unregulated at the moment. Pres-
ently, Bitcoin and other cryptocurrencies are not considered, as regulated instruments under MiFID II and
any Organization that handles cryptocurrencies are not required to undergo any form of licensing process
with the MFSA (Mata Financial Services Agency).

The only exception to this rule is if the coin can be considered as an investment instrument under the
Investment Services Act, and if they did, they would trigger the obligations of the act.

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However, a detailed analysis has been given above and Malta's legislation does not make exceptions for
cryptocurrencies if the token is not an investment tool in its legal essence.

Basic characteristics
The PBLC Token is essentially a utility, not security. However, third parties with aim to define as securities
can test the PBLC token.

The ERC20 technical standard used for all smart contracts on the Ethereum blockchain is still required after
the token swap to the proprietary main net, in order to distribute the token widely and to create a decen-
tralized network. The creators call it an ecosystem token, and, under the circumstances, it cannot be classi-
fied as security even after the token swap.

Thus, the main purpose and subject of this analysis is to identify the hidden or evident signs of securities,
investments, and violations of investors ‘rights. As a result, the ability to identify PBLC Tokens as securities
in both situations should be excluded.

Conclusion
1. At this stage of development, PBLC Token is more likely not to be deemed a “security” under the US,
Australian, European Union and other international legislation.
2. In the future stage, the PBLC Token should maintain the utility legal qualification, based on the Organiza-
tion’s business plan and the technical development of the PBLC.
2. We have found no signs of fraud and scam, Ponzi scheme, tort, consumer fraud, known schemes of income
laundering and tax evasion.
3. Token buyers do not have any rights to the Organization profit. The PBLC Token don't give equal rights
to their holders. This fact excludes the identification of the token as securities.
4. The founders of PBLC Token do not possess any ability to effect on the token price. The market price of
token does not influence on an Organization income and the Organization profit does not influence on the
token market price.
5. All scenarios of the turnover of the Token is strictly ordered and implemented on the blockchain by smart
contracts. No other scenarios are technically feasible. None of the scenarios of utilizing the token has the
signs of securities rights realizing.

Disclaimer:
The above analysis is based on information obtained from a representative of the Organization, the Organization’s
whitepaper, publicly available information, and the law as it exists as of the date hereof. Considered herein were the
U.S. Federal, Australian, the EU and other securities laws. Also, we have analyzed other legislations. No opinion is ex-
pressed with regard to any other body of law or legal construct, including without limitation the franchise laws of any
other country. No court has addressed the question of whether any blockchain-based tokens are “securities” under
U.S. federal law; as such, the SEC or a court of competent jurisdiction may reach an alternative conclusion to that
stated in this opinion letter. No warranties or guarantees of any kind as to the future treatment of the PBLC platforms
or Tokens are being made herein.

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