Recently at the request of several clients I wrote a blog entitled: “Is Satoshi Island Bitcoin’s Fyre Festival?” In this blog I asked a number of standard questions that any potential purchaser of a Satoshi Island Non-Fungible Token (“SI-NFT”) should ask in an effort to carry out a normal “trust but verify”due diligence.
A Response from Satoshi Island’s promoters!
The blog drew the attention of Mr. Denys Troyak Satoshi Island | Head Of Operations. He engaged in an extensive exchange with me, both publicly and by direct message. During this, Mr. Troyak mentioned both a Medium site and having released due diligence material previously. I have taken the liberty of attaching to this blog screenshots of both conversations as of the date of the publication of this blog. You will note that as of publication a link to this ‘previously released’ due diligence material has not been provided by Mr. Troyak… despite multiple requests for the same.
After reading this exchange and the Medium site, one can quickly dismiss a few clumsy debate fallacies in which Mr. Troyak initially engaged. Namely:
- Ad Hominem personal attack against me: i.e. the Vanuatu vendetta claim; and
- Arguing irrelevant minor points: i.e. the discussion about minor differences in flight times is irrelevant as to whether or not a SI-NFT is a worthwhile investment. Note: Despite showing the link for the times I cited, Mr. Troyak tried to dismiss ALL my questions in a claim that because he could cite other times (for private travel) ALL my subsequent questions were somehow based on “bad research”.
What questions should be answered to determine if this is worth considering?
This leaves one to try and conclude whether Mr. Troyak, speaking on behalf of Satoshi Island, has met the burden that I set out in the introduction of my initial blog. Namely to show potential purchasers of SI-NFTs that this is NOT a fraud or a bad deal.
In summary, potential purchasers should be evaluating Mr. Troyak’s responses to the following requests:
1) Evidence that Satoshi Island is owned by Satoshi Island Holdings Limited;
2) Copies of Articles of Incorporation, Shareholder Registry, Director Registry for Satoshi Island Holdings Limited;
3) Offering Memorandum for SI-NFT which details all the specifics of the offering;
4) Confirmation of US Securities compliance of offering as it is being advertised to US residents;
5) Outline of land rights the SI-NFI holder will obtain, freehold, lease, condo etc.;
6) Copy of Environmental Impact Study;
7) Copy of Development Plan;
8) Evidence of all relevant government approvals for development plan (Note: A light and breezy non-committal “Welcome to Vanuatu”letter is not sufficient);
9) Evidence of initial funding already in place for the necessary infrastructure (e.g. roads, electricity, internet access, water treatment, waste disposal, fire and police, marina or air access) to execute the required initial stages of any development plan;
10) Evidence that this infrastructure will be in place to meet your website timeline commitments;
11) Outline of costs of various modules? Where and by whom will they be constructed? What quality standards? Delivery timetable?
12) What are the excise and customs duties payable on the “pre-fabricated” housing modules?
When does building start? In Q2 of 2022 (as stated on the website) or only after a large number of SI-NFTs are actually sold?
Also Mr. Troyak’s answers are somewhat confusing on the point of whether or not his group (which he claims has spent over $10 Million USD to date) is “ready to build or already in the process of building the required underlying infrastructure”. One possible interpretation of his response is that his group will only start to do so once they see how the sales of SI-NFTs is progressing. If the latter is the case then these additional questions should be asked:
13) What is the “magic number” of sales of SI-NFTs that need to be sold in order for the project to move forward? What is the basis for this “magic number’?
14) Will all proceeds of the sales of SI-NFTs be kept in escrow until the magic number is reached? Can he supply a copy of the Escrow Agreement? What are the building landmarks for release of funds? Who is the Escrow Agent and who will independently confirm that building landmarks have been reached?
15) Is there discounted pricing for “off plan” early purchasers?
Environment Impact Study, Development Plan and Government Approvals not needed?
You will also note in the conversation that in response to a request for a copy of an Environmental Impact Study, Development Plan and all government approvals of same, the only response made by Mr. Troyak was “Evidence of all relevant government approvals for development plan. This is not relevant or required/possible to obtain. Those who have an understanding on how development approvals in Vanuatu work on custom land will concur.”
Interested purchasers should remember that even someone as famous as Leonardo DiCaprio found that local buy-in is more than just “hiring locals” and that a failure to appreciate the importance of environmental studies and acceptance by local populations and politicians can delay even the most internationally fashionable projects for years or even kill the enterprise all together.
Knock Knock….Whose there?…US Securities Commission!
Finally, Mr. Troyak thought that my request for proof of US Securities compliance was “off-line” as “products are not securities”. For the sake of promoters of Satoshi Island, I would STRONGLY suggest that they engage US securities counsel to determine if their offering of SI-NFTs runs afoul of the “Howey Test”. If so, they need to immediately bring themselves into compliance.
Time for purchasers to decide
In closing, my objective in both this and my initial blog was to provide potential purchasers of SI-NFTs with the right questions to ask to make an informed purchase decision. It is now up to them to determine if Mr. Troyak has satisfied them with his responses.
In my next blog, I will be discussing practical steps to consider for those crypto-enthusiasts who are no longer considering purchasing SI-NFTs…. but who still want to live with like-minded people while enjoying the fruits of their early adoption in a more tax efficient manner.