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© Ong’anya Ombo Legal Consultants 2018
Ong’anya Ombo Legal Consultants
DISCLAIMER
We, Ong’anya Ombo Legal Consultants, do not take any form of liability
as provided by any law during the period before, when, and after the
drafting of this legal opinion that was solely requested by the CloudMind.
The information herein is in tandem with the resources acquired during
the period, February 18, 2018, when this legal opinion was drafted,
further, the legal opinion came into place prior to the official operation
of the CloudMind; hence, the sentiments herein refer to the form of the
CloudMind as it appears on paper, which is the White Paper and not in
substance.
It is agreed that the contents of the legal opinion is to serve only the
CloudMind, and not anybody else, therefore confidential. The
information shall not be shared with anybody without requesting such
consent from Ong’anya Ombo Legal Consultants.
We note that the CloudMind intends to share the information with its
prospective investors, and or subscribers of whatsoever description, and
of which we agree on condition that we are strangers to any legal action
that may be instituted by any person, thus, juridical, natural, and
unincorporated. This disclaimer is in rem.
Ombo Malumbe
Ong’anya Ombo Legal Consultants
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© Ong’anya Ombo Legal Consultants 2018
Ong’anya Ombo Legal Consultants
GOAL GENERAL
The CloudMind ICO will be useful in providing Decentralised Applications If there is any word or words that seem to be inconsistent with CloudMind ICO
(DApp), which a significant aspect of Ethereum Blockchain technology, to enable White Paper, then the words of the White Paper shall supersede.
its users, individuals and businesses, to harness the use of Cloud based services.
The use of DApp in CloudMind will reduce costs, time and improve the data The use of cryptocurrency or tokens in relation to securities laws or regulation
transfer, and security as compared to the centralised traditional Cloud services, has not been extensively been addressed over the world, but various
as is. Importantly to note, CloudMind will harness Artificial Intelligence (AI) Governments have adopted various principles such as the Pacific Coin Test,
technology to make its platform more user friendly in terms of data Howey Test, and Hawaii Test (and their respective legislations) to establish
management. whether Initial Coin Offering or Initial Token Offering among others fall under
the purview of securities laws and regulations. In light of that, the foretasted
RISKS tests are extensively addressed with a view of assessing CloudMind ICO White
Legal Risks: this is based on the simple fact that the laws of the Country might Paper.
change and make it hard to operate or certain areas of operation to be
immensely affected. The results of the analysis of these principles show that CloudMind ICO White
Paper is not a securities exchange, cannot, and will not be regarded as such
Cyber Security: there are measures in place to develop the best security unless the regulatory framework takes a different dimension.
features. However, we understand that despite such efforts, the likelihood to be
affected by various forms of cyber-attacks is always a real threat to any
technology based entity.
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© Ong’anya Ombo Legal Consultants 2018
Ong’anya Ombo Legal Consultants
Does it fall under Narrow Vertical It refers to the event that the profits of the investor The profits, if any, will not be tied up to the investors.
Approach? are tied up to the promoter of the company.
Does it fall under the Broad This is whereby the success of the investor is The Partners in the project are skilled. However, they
Vertical Approach? depends on the owners prowess in that activity. will not control the process as that will be under the
Ethereum Blockchain self-executing codes and
Artificial Intelligence, therefore, the Partners will not
be in control.
In general, can CloudMind be In general and consideration of the White Paper As per the test therein, it is likely, however, there being
referred to as Common can it be inferred that due to certain factors such as no initiative by the Government to define or consider
Enterprise? using the amount received from the Pre-Sale and the cryptocurrency as any form of Securities products,
ICO to develop the platform among other amount then it does not amount to common enterprise.
to Common Enterprise.
See Pacific Coast Coin Exchange v. Ontario
Securities Commission (supra).
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© Ong’anya Ombo Legal Consultants 2018
Ong’anya Ombo Legal Consultants
Miscellaneous
Is there a timeline for purchasing This concerns whether there are timelines Private Sale
the tokens? provided for issuance of the tokens’ – which serve
as a right for one to utilise the platform to attain a Pre-Sale
certain commercial goals.
Main Sale
Securities laws’ apply? If the CloudMind ICO meets the four-part test then The four-part test ought to be realised in full. Therefore,
the Security laws’ and regulations will apply. it is not considered as that which falls under securities.
Substance over form principle is Substance over form is about the actual practice The actual reading of the law can link the ICO to
safe from being described as that and not what the White Paper states. Securities, however, since the Government has not
under Securities Law shown interest in exerting the laws towards the project,
then it has no risk.
Is there risk capital approach This is referred as the Hawaii Test that was adopted There risks involved, and they will not take any
in State of Hawaii v. Hawaii Marker Center, responsibility for the same.
Inc., 485 P. 2d 105 and quoted in Pacific Coast
Coin Exchange v. Ontario Securities Commission
(supra). The possibility of losing the funds
contributed to the investment:
a) The funds are raised for capital venture or The country of operation does not recognise altcoins as
enterprise. legal tender, for any reason even for purposes of
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© Ong’anya Ombo Legal Consultants 2018
Ong’anya Ombo Legal Consultants
c) the investors are substantially powerless to Yes, the investors do not have any control on the
effect the success of the enterprise. success of the entity.
d) the investor’s money is substantially at risk Though the law does not consider tokens, assets, as
because it is inadequately secured. money, then it is impossible to assert that money is at
risk. However, there are reasonable measures in place
to mitigate similar risks.
SCALE
Perilous
Grey Area
Safe
DISCLAIMER: The legality of CloudMind and or the Initial Coin Offering (ICO) and the subsequent tokens that shall be issued during various phases of the ICO at
whatever virtual currency shall not be considered as issuance of securities under any law. Therefore, this does not apply to anyone, be it as a natural person or juristic
person (whether incorporated or not) who is from a Country that does not have similar legal standing as that envisioned herein, which is demonstrated herein
through the detailed legal opinion. In that regard, any statutory compliance other than that indicated herein shall not be adhered to, and we shall not take any
responsibility directly or indirectly for any civil or criminal proceedings that shall be effected against anyone who utilises our platform, directly or indirectly. In
addition, you will be liable to CloudMind for any loses, law suits, and damages that may arise due to your conduct, whether directly or not. It is agreed that upon
accessing our website, be it a subdomain, domain, and or mobile application of any nature you agree to have read and understood (regardless of not reading or
understanding) the Disclaimer, Terms of Service, Privacy Policy, Cookie Policy, Acceptable Use Policy, and the Know Your Customer notice and that they bind you
without any reservations.
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© Ong’anya Ombo Legal Consultants 2018