A Legal Review of PlayHall ICO



@lawlesstech



The lawless.tech team has prepared a brief legal review for a multi-cryptocurrency game of skill platform on mobile apps called PlayHall. PlayHall is a platform that allows players to compete against each other to test their skills and earn tokens.

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1. Competitors (direct and indirect):

Gizer. Gizer is a peer-to-peer network driven by interactions between different parties (gamers, hosts, small businesses, freelancing services, venues) within the global gaming community that allows one to manage tournaments, sponsorships, etc. MobileGo. MobileGo seeks to allow gamers to engage in peer-to-peer match play and organize decentralized gaming tournaments. ALAX. ALAX aims to improve the distribution lifecycle of mobile games and offer a faster, more efficient and secure system to improve the experience for developers, players and distributors alike.

2. The team. This Belarusian startup has the experienced CTO Vadim Nareyko and the skilfull PM Eugen Kaufman as the CEO. Also, there are investment and finance managers, a professional marketing team, an experienced advisory team, and a band of lawyers.

3. Whitepaper. The WP is available on the project’s website as well as the one-pager and the Pre-Sale presentation. There, one can also try/test a beta version of the platform.

4. Legal aspects:

a) Product description in legal documents. Terms and Conditions, as well as Terms of Token Sale, converge with a story in WP and on the website.

b) ICO legal model: As long as the PlayHall platform is in beta, the team continues to develop and market the platform. PlayHall uses SAFT model to make an offering for U.S.-based accredited investors, while in the rest of the world PlayHall sells tokens to the general public via a common utility tokens sale.

c) Issuer. The corporate structure of the company is viable. The issuer of the tokens is PlayHall Inc., a legal entity incorporated in the British Virgin Islands. The company was established in December 2017 and features a corporate structure required for the purposes of the token sale campaign.

d) Governing law. The governing law applicable to the accredited investors is the law of the State of Delaware. Disputes are to be resolved in accordance with the rules of the Judicial Arbitration and Mediation Services (“JAMS”). On the other hand, the public offering (presale and token sale) are governed by English and Wales laws. Disputes related to the public offering are to be resolved by the International Arbitration and Cryptography Centre Limited (“IACC”).

e) Legal Nature of Tokens. Based on the general principles of the Securities Law, our view of the relevant U.S. case law, and on our understanding of the facts and PlayHall Token (PHT) structure, we conclude that PHT as designed isn’t likely to meet the definition of a “security” and, therefore the federal securities laws should not be applicable to the initial distribution and subsequent trading of PHT.

f) Whitelisting. PlayHall is using whitelisting.

g) ICO participants’ rights and obligations:

I) If a buyer fails to pass the KYC procedure, PlayHall will not distribute the (PHT) to the buyer.

II) PlayHall reserves the right to verify certain eligibility requirements on the website at any time or to bar certain residents from purchasing PHT.

III) Should a buyer violate any terms or any other accompanying documents of PlayHall, there could be no refunds from PlayHall. Also, any and all purchases of PlayHall Tokens (PHT) are final and non-refundable.

h) License. The campaign itself, PlayHall marketing activities, and sale of the PHT do not constitute a gambling instrument. The company doesn’t advertise, stimulate, promote and / or encourage gambling in any way. It has pure game of skill nature, as does not have the unpredictability and random character of the result, on which the parties either can or cannot exercise a decisive influence, risky or aleatory nature, and has positive correlation between the outcome and skills of the player.

The main problem, however, is that many token-based platforms will never be "fully developed." In these cases, even tokens regarded as utility ones may still effectively be securities as the continuing efforts of the platform’s sponsors or third parties may have a significant impact on the future value of the tokens.

For the reasons described above, it seems wise to sell tokens via SAFT exclusively to accredited investors in the U.S. and through simple token sale agreement beyond the USA. PlayHall offers a reasonable model of legal structuring.





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