NAGA ICO — Is it Snake Oil?

Disclosure: I am going to do lot of FUD and also would do all my best to show NAGA ICO in bad light. if you want an unbiased view please find some other post. But you want a fully biased FUD please proceed.

I do not call ICOs Snake Oil often, but in case of NAGA I found some disturbing traits and after digging I feel its more of a Snake oil for ICO Holders or shall I say a Bag of sand. If you want to find out more lets explore further.

What is Snake Oil?

  • a substance with no real medicinal value sold as a remedy for all diseases.
  • a product, policy, etc. of little real worth or value that is promoted as the solution to a problem.

A FUD filled comparison of why some App coins are snake oil can be found in the below article.

Though I do not fully agree with the above article in general but with respect to NAGA ICO it holds true.

What is NAGA ICO?

The Naga Group AG is a German company listed on the German Stock Exchange, owning financial licenses from BaFin and CySEC. Over the last 2 years, NAGA has raised over $15m in capital from various prestigious investors such as the private bank Hauck & Aufhaeuser (founded in 1796) and the FOSUN Group.

THE COOKED UP PROBLEM:

Investments and trading are ruled and governed by greedy banks and corporations that control access, operate non-transparently and always take a cut of your money.

THE PHONY SOLUTION :

One decentralized cryptocurrency for:

- Financial Markets (SWIPESTOX)

- Virtual Goods (SWITEX)

- Cryptocurrencies (NAGA WALLET)

They will enable everyone to make money on one platform!

- Securely

- Simplified

  • Without banks or a bank account

Some Nice FUD on NAGA around the Web

Ok these were the some really good FUDs that I got from the web that dub NAGA is more of a scam or a risky investment and since I may use excepts from them I feel better to share them first here.

The above video was launched when NAGA was launching for an IPO in Frankfurt stock exchange and basically what this video summarized that the stocks traded via SWIPESTOX were not legal as NAGA did not have the appropriate licenses to trade in Germany and also showed the worry because of the risks it posed to German investors.

The above Blog is probably the best blog I have ever found on NAGA FUD till date.

I am adding some of the interesting excerpts that I found which I feel were really good FUD.

Views on the July IPO

Things are though very different for a German company called “The Naga Group”. The company IPOed 5 months ago on July 10th in Germany in the lightly regulated “Scale segment”. Initially, its aim was to specialize in “disruptive Trading technologies”.
The disruptive technology is an App which is the “Tinder of Stock trading”. The product is a “social trading business platform” called Swipestox, trying to earn most of its money with advertising. I have looked up the App on the Google play store and it has been downloaded a 100.000 times which is OK, but not great. Interestingly the newest comment/rating is from beginning of September, so I am not sure how actively this App is used.

Views on the investors in NAGA

The company boasts 2 prominent pre IPO investors: Hauck and Aufhäuser, a well-known German private bank and Fosun, the conglomerate from China whose founder went “missing” some months ago, but then reappeared , Oh, and Fosun actually bought Hauck and Aufhäuser last year.

Views on NAGA operations and losses

In the first 6 months of 2017, the company had around 4 mn EUR in Revenues and roughly the same amount of losses and virtually no cash on hand despite significant amounts raised from Fosun.

From the below statement its clear that NAGA is a click bait company solely focused to hype of stocks with some announcements.

The first major spike in the stock price happened in July, when Naga released that they will create the “Naga Wallet” which will allow users to participate in Bitcoin, Ethereum and ICOs. Interestingly, also the Swipestox app claims to offer Cryptocurrencies but who cares ?
After spiking briefly, the stock price went down again and hibernated around 4 EUR when then in September Naga Group announced their own token sale, which surprisingly is called the “Nagacoin”

Here is the announcement:

In the course of the development of the NAGA Wallet (see Ad- Hoc Notification dated 18 July 2017) customers of The Naga Group AG as well as other interested parties shall be enabled to buy a cryptocurrency — the Naga Coin

Now this definitely helped to pop up the stock price.

This pushed up the stock price again to around 15 EUR/share (~300 mn EUR market cap).

Funny aspect of this ICO is that although they want to create a “Naga Wallet” to dominate crypto currencies, the recommend to open a free existing “myether wallet” in order to be able to receive the Naga Coins.

The past that I found in the above article link was this paragraph:

“the Naga Group”, you seem to have finally developed the first fully self-sustaining money machine. A successful ICO will increase the stock price which will increase the price of Nagacoins which will increase the stock price which will increase the price of Nagacoins….I am getting really dizzy writing this.

And probably the best reason one may think to buy this ICO

And why would anyone buy those shitty coins ? A fat discount of course. Early “investors” get a 30% “discount” and even extra coins if they recommend this to friends.

And ohh yeah they also show you the referral bonus

Haha sounds like MLM or OneCoin right, but they are sophisticated as they have some apps to show that they are into Crypto and yeah they also listed on Frankfurt exchange.

Token Sale Agreement & Terms / Conditions

Now lets explore their Agreement

And the Terms & Conditions

Some of the key facts to keep in mind

The company behind Tokensale is “NAGA Development Association Ltd” company that is incorporated under the laws of Belize. For those who do not know Belize which even I did not. Please refer wikipedia link below.

Yeah an offshore tax heaven, so you directly send your money to their tax heaven accounts where they may remain behind unknown maze of corporate shell companies which you will keep running around and by they way if you agree to these agreements then this is gonna happen.

Note that Clause 9 of the T&C contains a binding arbitration clause and class action waiver, which, if applicable to you, affect your legal rights. If you do not agree to these terms of sale, do not visit the Website and Use the Tokens in any manner and also do not participate in the Sale of the Tokens.

Which is funny as if you how they have fixed their token price exposes them to US regulators which I am sure they have covered in their Terms & Conditions.

Another key point to highlight is that NAGA almost owns 45% of the tokens which doesn't sound to be a good proportion for any token or coin in an ICO.

The Company will own approximately 45% of the total NGC produced (the “Retained Tokens”) after the sale is completed. They are divided into different heads contemplated for distribution as stated below. Although it has no plans to do so at this time, the Company reserves the right to burn Retained Tokens at any point during or after the Sale Period.

Another part of their terms and conditions is who are allowed and who are not allowed to be part of their ICO.

So you can see basically the restriction covers all such countries which are either blacklisted for other ICOs as well because of strict regulatory restrictions viz a viz ICO or because they may be sanctioned by EU or heavy risk of money laundering is involved.

But the funny part is one of the founders do not like regulations despite being a regulated company and listed in a German exchange.

NAGA Corporate structure & Risks

Thanks to the below link which is a report based on research on NAGA group you are going to find some really fascinating details about NAGA and why it may not be really that great idea to invest in this ICO.

The below image of NAGA Group AG

Whose CEO is Yasin Sebastian Qureshi. Now if you read the report there is a web of acquisitions and a web of counter investment which forms NAGA group where NAGA Group AG is the holding company.

Income of NAGA Group

NAGA currently generates sales revenues almost exclusively from the brokerage business. Commission earnings are recorded as service revenues, from external brokers via SwipeStox.

Some of the key risks factos with NAGA Group:

  • Litigation issues: Mr Qureshi was a member of the management board of a company that provided a shelf-fund (TGV of an InvAG, comparable to SICAV, an open-ended collective investment scheme) to an asset manager who executed dividend arbitrage transactions which are now under investigation. The investigation includes all entities and their management boards
  • The acquisition of the major investments is still subject to the approval of the relevant supervisory authorities. NAGA remains liable in future for losses incurred by ZACK Beteiligungs, which it wishes to acquire, pending approval from the Cyprus Securities and Exchange Commission.
  • In its general ruling of 8 May 2017, the Federal Financial Supervisory Authority prohibited the distribution of Contract for Differences (CFD) with additional funding obligations (ie leverage) to individuals in Germany with effect from 10 August 2017. Currently the trading terms of HBGM for CFDs provide for a reserve liability for all customers and this regulatory change may incur additional costs for the HBGM.
  • SwipeStox bears 50% of the losses from HBGM’s own commerce with new customers, up to €250,000 per month. Furthermore, SwipeStox will also bear 50% of HBGM’s external costs (IT, maintenance, development costs) incurred in connection with its platform and trading activities, up to €10,000 per month.
  • Working with Deutsche Börse, NAGA seeks to address the needs for a regulated cross-game secondary market with SWITEX. The joint venture with NAGA is not Deutsche Börse’s first attempt to run a regulate market for in-game items. Its high profile launch of the collaboration with Swapster on Deutsche Börse’s Analyst Day on 25 August 2015 eventually went into oblivion. NAGA indicates that it won the beauty contest organized by Deutsche Börse to obtain this exclusive cooperation opportunity. Different from the trading of financial instruments, the trading of secondary in-game items comes with the complexity of intellectual properties. Signing up with game publishers is critical to the business case of SWITEX. Which would be a key challenge.
  • I truth SwipeStox has no licenses to do trading, it does it through Hanseatic Brokerhouse Global Markets (HBGM) is SwipeStox’s preferred broker. Pending approval from the Cyprus Securities and Exchange Commission, SwipeStox (100% owned by NAGA) will acquire all shares in ZACK Beteiligungs, which holds 100% of Hanseatic Brokerhouse Global Markets (HBGM). Now here there may be potential conflict of interest and they are not authorized to do an ico also by German law while they are trying to sell their platform to be like a public listed company.

How the funds from NAGA ICO be used

This sentence in the 6 month report:

The funds raised from the public will not be consolidated into NAGA’s balance sheet. The NAGA token-sale does not create any shareholdings. It will be a pure unit of account and therefore represents an extension of NAGA’sproduct range.

So it seems that the full proceeds go to somewhere else. Interesting.

But finally my Biggest anguish with NAGA token is this how this snake oil token can be used:

The above statement is in all respect same as OneCoin. And whats more they have some more interesting features in NAGA Wallet.

I only wonder which un-banked person in rural India or Sub Sahara Africa will use NAGA tokens to invest in financial markets or do in-game-item trading which is why I call NAGA tokens Snake Oil.

What does Crunch Base says

Referring to below link:

https://www.crunchbase.com/organization/the-naga-group-ag

One can see that

They have already raised almost 13.5 million EUR from two rounds of fund raising and

They raised 3.6 Million EUR already from the IPO, but from insider news seems they really raised only 2 Million EUR and were a failed IPO and hence the ICO where they have already raised 7 Million and where they do not have any legal liabilities as they are not selling equity.

Final Thoughts

From one of the above links I can conclude the profile of NAGA

“The Naga Group” at first looks like a typical 1990ies stock promotion: Announce to do something spectacular and then sell only a little bit of stock and pump up the price with further spectacular news (but little actual achievements).
However the ICO aspect adds another tool to the stock promoters: With a successful IPO, they can actually create “value” for the company because any ICO proceeds are basically “free money” for the company. Other than debt, it doesn’t have to be paid back and other than issuing new shares it doesn’t dilute the promoters.
As in this case, promoters can take a direct cut of the proceeds and then profit again if their stock goes up. So for them it is a nice “double dip” and in total what I would call a “double pump”.

My advice to investor of course the only option is to stay as far away as possible from this. Plus, the names of the management and main advisors should go on one’s own “black list” of people where you want to stay away from, wherever they will appear later after this thing has imploded.

Ahh and talking of Advisors, one of the core reasons I started this FUD….

I personally do not like Roger Ver & Bitcoin.com very much because of their continuous FUD on Bitcoin. And hence my FUD NAGA, plus all the reasons above.

But if you still want to buy NAGA tokens well then the below value prop is for you, as token lovers always like bonus.

Disclaimer: This is not investment or trading advice, always do your own independent research.

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