When I write about ICOs I try to draw the line when it comes to expressing emotions. Okay, in my case the line might be a little too thin sometimes. However, it does exist and I might have been tempted to cross it in this particular post. Apologies if it seems inappropriate but it felt good.
After my previous review ZrCoin project sprouted an FAQ. The team got busy enlarging it and after several (five?) iterations I got a message from them saying:
Fair enough. I guess I will have to make another stab at providing “constructive serious notes” since my first attempt was apparently unsuccessful.
First off, I shall write about Google’s terms when they decide to do an ICO, and in this case I’ll be among the first to queue up for Google tokens. Alas, I don’t see that happening, perhaps because people running Google are not as financially or tech-savvy as their counterparts from ZrCoin.
Second, I would like to compliment ZrCoin team on finally toting a decent-size FAQ. Twenty-eight points is a serious achievement. Let’s hope it is big enough to impress prospective investors.
The terms
8. Can investors feel safe?
Each investor is provided with an option. The investment is made in the form of funds loaned to the Russian company by a foreign fund, and the investor becomes a shareholder in the Russian company. The loan is used to get the invested funds back and to gain investment income. That is why all assets are encumbered, meaning the equipment, etc. Therefore, every owner of the digital token is safe.
At first I thought the “shareholder” word in this paragraph looked a little out of place but ZrCoin website advertises the “opportunity to become a shareholder in production company” on its main page. With two economists on the team (including Mr. Sychev himself) and two financial experts in the escrow there can be no mistake — it is there because it is meant to be there.
The definition for the word “shareholder” says “a shareholder is any person, company or other institution that owns at least one share of a company’s stock.” ICO investors can only own shares in OOO Zircon if they become either a). Shareholders in Lagata Investments Limited, or b). Shareholders in OOO Zircon directly.
I think everyone will agree it’s a highly disruptive innovation for VC market: ZrCoin team is breaking new ground providing tokenholders with direct ownership in the company. I can hardly wait to see ZrCoin ICO investors visiting shareholders meetings in Magnitogorsk and electing board members.
If someone is displeased and wants to quit, he/she is free to do so at any time.
What is the exact procedure of bailing out someone’s investment? The answer has to be a little more specific, because Article 3.2 of Terms & Conditions says after the ICO it can be as complicated as rigging a game of musical chairs: you have to make sure someone occupies your particular seat before the music stops.
21. You write that you can amend the agreement at any time. Should I monitor you website 24/7 to keep up with the amendments?
You are free to do so, but it is not necessary. In accordance with paragraph 12 of our agreement we will notify you of any amendments via e-mail.
12. Notices
12.1 We may provide any notice to you under this Agreement by: (i) posting a notice on the website; or (ii) sending an email to the email address then associated with your account.
“Posting a notice” or “sending an email”, not “posting a notice” and “sending an email”. While “or” and “and” are both coordinating conjunctions they carry slightly different emphases. For instance, when someone says “you may invest in our ICO or make a profit” it doesn't necessarily mean making profit is what is going to happen.
23. Why have you chosen Moscow Arbitrage?
All assets and contractors under the project will be located in Russia, and in case of any disputes it is much easier and faster to resolve them on the territory where the assets and people are located.
The production facility is supposed to be located somewhere near Magnitogorsk, right? Going from Magnitogorsk to Moscow is the same as going from Washington to Las Vegas or from Rome to Berlin. Doing this every time you have to “resolve disputes” with your local contractors instead of going to a local court looks a little counter-intuitive and slightly sadomasochistic.
9. Why do you use a foreign investment fund?
It is prohibited to sell cryptocurrencies in Russia.
Apparently someone forgot to tell Moscow Arbitration Court about that. If a “shareholder” decides to seek a “resolution of dispute” with OOO Zircon or Lagata Investments after the ICO — what will the procedure look like exactly?
The project
17. They write to us and say that ‘We have spoken to some refractory experts and they say it is impossible’.
28. They write to us and say that ‘I talked to an expert, and he told me that ZrO2/HfO2 + Аl2O3 + ЅіO2 formula is not bad, but if it had other properties, it could be widely used’.
This is not what the expert said. The expert said the concentrate is not pure enough to be as versatile as “standard” zircon sand and because of that the indicated price of $2,800/ton might not be achievable. The expert also described the process of purification for initial waste material and said that this kind of process is probably “economically infeasible”. Judging by what Mr. Merzlyakov says in ZrCoin’s “official presentation of technology” video, the expert was right about the process in use. However, in case of ZrCoin it seems not only not to be “economically infeasible” but also extremely profitable: there is 42% net profit (or better, since we are not taking taxes into account) and that makes people like me extremely curious.
In the video Mr. Merzlyakov says something about “presented technology” and demonstrates something that looks like a process flow diagram. Perhaps ZrCoin team would like to share the diagram with their potential investors. People in the conference saw it, so it’s definitely not a secret.
“We will use the material to register our own trademark, as there are no analogues.”
That would be terrific. A patent application would be even better. ZrCoin team spent two years and “over one million dollars” on R&D and developed a revolutionary product with unique qualities — and it seems like the need to patent the precious invention has somehow slipped their mind. A patented invention provides for a lot more credibility, because in order to be eligible for a patent it has to meet the patentability criteria, novelty and applicability among them. Is there a patent?
We also sent our products to the Germans (Viktoria Garten Huttenindustriebedarf AG (VGH)) for analysis. The Germans were surprised with the quality of our zirconium concentrate and when they were told that it was made of the industrial waste they got into raptures. And at the Metal Expo 2016 held in Moscow on November 8–11, 2016 they confirmed their willingness to buy our products.
RHI Company , the world’s leader in capitalization ratings, also showed its interest in our products at the Metal Expo 2016.
If I am correct, VGH AG is actually run by Russians, not Germans and its CEO studied at MISiS. Futhermore, according to the time-line on ZrCoin web-site, in the beginning of November the technology was still under development.
Let’s have a look at the news section, 29 March 2017:
ZrCoin team important collaboration
During the XIII Ferrous and Non-Ferrous Scrap Metals Forum our team reached an agreement on cooperation with Aleksandr Sharuda, CEO of Vtormet Holding.
ZrCoin team “reached an important agreement” with a Moscow-based scrap metal company that has nothing to do with Magnitogorsk or refractories and there is a report about that on their web-site deftly illustrated by a picture of Mr. Merzlyakov, Mr. Sychev and Mr. Sharuda standing around a cafeteria table. Yet the team chose to be modest about VGH AG “getting into raptures” and RHI AG “showing interest” — there are no pictures and no “important agreements”.
A straightforward confirmation from RHI AG or any other well-respected company would be enough to put an end to the doubts about merchantability of the concentrate. Perhaps ZrCoin team could make some company representative say on the record that the concentrate is so awesome they would buy it at $2,800/ton in a heartbeat?
Or just make a reaction video! A video of someone like Herr Gerd Schubert, CTO of RHI AG, “getting into raptures” over ZrCoin concentrate would impress a lot of people.
18. The founders of Zircon Ltd are also top-managers in other companies and have large businesses, could they find strength to be in this project?
To my mind, it is ridiculous. What we do is not just a job, it’s a hobby.
I guess that officially makes ZrCoin project a jobbie then.
This is all I have time for now. I hope this helps. Make sure you have read and understood the disclaimer at the bottom. If you come across any factual mistakes or faulty grammar you are welcome to point them out in your comments. To get updates or PM me you can also follow me on Twitter.
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