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Legal Structure and Legal Status of Token

The Karma token would be registered as a security in the U.S. and the implementation of the token would be carried out by a select number of qualified investors. The sale of tokens would be based on an offer and token owners do not have restrictions on reselling the securities to others. With the help of Open Ledger, tokens would be sold through the exchange. Moreover, it would help Karma follow anti-money laundering requirements and the know your client procedure would be conducted with the help of Open Ledger.

Moving on, here’s a look at the organizational and legal structure.

Source: Karma

A. Trust in Cyprus. Token holds are often poorly protected by law. That said, a professional trust will represent and protect token holders’ interests. Trust protectors would be several independent participants. The Settlors (trustors) will be Artem Laptev and George Goognin, who would have equal proportions of 50%. In the trust agreement, there will be prescribed a restriction on the payment of dividends and the beneficiaries would all be token holders.

Artem Laptev is the founder and director of investments for Karma. Laptev has extensive experience in the space and has managed a private fund of P2P lending to SMEs.

George Goognin is also the founder of the project and has automated large e-commerce, such as Samsung, LEGO, Nike and Facebook. That said, the trustors could be trusted and would protect token holders’ interests and as well as their own.

B. Holding company. The holding company will receive intellectual rights to the Karma project. The company's operational activities will be related to a technological part of the platform development, as well as brand promotion.

C-E. Operating companies in the countries where the business is being done. The holding company will become a 100% founder of local operating companies. Some countries may require a local legal entity to deal with local currency.

F. The operator of token sale. An independent European company was involved in ITO. This company was responsible for compliance with AML and KYC procedures when implementing tokens. The responsibility for the realization of the project is in the hands of the Trust.

Electronic contracts would also be implemented on Karma. Documents would be implemented in electronic form and recorded in the blockchain which would increase security, transaction speed and minimize the risk of loan fraud. Although most countries should be shifting to electronic documents in case hard copies are lost, there are some countries in which the courts do not accept electronic contracts. Consequently, those countries would be excluded from the platform.

Some examples of electronic contracts that could be implemented on Karma include:

  • Loan agreement
  • Loan extension
  • Currency transaction passport
  • Hedging of currency risk
  • Insurance
  • Collateral decoration and withdrawal
  • Claims and collective actions
  • Settlement agreements
  • Assignment of claims
  • Agreement with the collector

Karma’s implementation should be highly beneficial to both the courts and users. Moreover, with the implementation of electronic contracts that are going to be recorded in the blockchain, users would not have to worry if they lose their contract because there should be a backup of it.