United States
In the United States, DFLX relies upon exemption 506(b) of the Securities Act. This means that:
- We will not use general solicitation or advertising to market any CFI NFT’s
- Only allow the sale of CFI NFT’s to sophisticated* or accredited investors**
- Make knowledgeable persons available to answer questions of prospective purchasers
- Ensure that the CFI NFT’s are restricted securities and can therefore only be resold under the terms of Rule 144
- Ensure that sellers complete and file Form D within 15 days of their first sale
*A sophisticated investor is an individual or group having sufficient knowledge and experience in finance and business matters in order to be able to evaluate the risks and merits of a specific investment.
**An accredited investor includes any individual who earned income that exceeded $200,000 ($300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, or has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence). Entities such as banks, insurance company’s registered investment companies, partnerships and corporations are required to hold assets valued over $5 million or have equity owners that are all “accredited investors”.
We will ensure that all investors have access to the type of information normally provided in a prospectus of a registered offering under the Securities Act via the listing information within the DFLX platform.
As a sophisticated investor you agree to take the securities for long-term investment without a view to distribute the securities to the public except pursuant to the applicable rules of the Securities Act relating to the resale thereof. Our secondary marketplace acts as a resale platform for CFI NFT’s to sophisticated investors however listing may only take place 6 months after the initial acquisition. If you list for resale prior to this then the NFT will be burned from supply and future rewards lost.
United Kingdom
In the United Kingdom, DFLX relies on the exemption of securities to publish a prospectus under Article 1(4) and in doing so will ensure that:
- The offer of securities is addressed solely to qualified investors;
- The offer of securities is addressed to fewer than 150 natural or legal persons in the United Kingdom, other than qualified investors.
The resale of any CFI NFT security must be conducted through the DFLX platform so as to ensure ongoing compliance with the exemptions to the prospectus set out above.
At present the activities of DFLX in providing a P2P service do not come under the registration scope of MLRs.
EU
In the EU, DFLX relies upon the exemption of securities to publish a prospectus by ensuring that CFI NFT’s are only marketed to Professional Clients*
*To be classified as a professional client you must meet at least two of the following criteria:
- Your financial assets must be equal to or greater than 500,000 EUR
- You have carried out an average of at least ten transactions of significant size, in unlisted shares per quarter over the previous four quarters
- You have held, for at least one year, a professional position in the financial sector that required knowledge of investments in financial instruments
In addition, DFLX ensures that CFI NFT’s with maximum investment values greater than the below thresholds will not be marketed in the relevant member states:
- Austria, Belgium, Cyprus, Estonia, Greece, Malta, Netherlands & Slovenia > 5 Million EUR
- Bulgaria, Croatia, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Norway, Portugal & Spain > 8 Million EUR
- Czech Republic, Hungary, Romania & Slovakia > 1 Million EUR
- Poland & Sweden > 2.5 Million EUR
Australia
In Australia, DFLX relies upon the exemption of securities to publish a prospectus by ensuring that CFI NFT’s are only marketed to Sophisticated Investors*
*To be classified as a sophisticated investor you must have one of the following:
- A gross income of AU$ 250,000 or more per year in each of the previous two years.
- Net assets of at least AU$ 2.5 Million (this can include the value of your main family home however mortgages or loans must be offset).
Canada
In Canada, DFLX relies upon the exemption of securities to publish a prospectus by ensuring that CFI NFT’s are only marketed to Accredited Investors*
*To be classified as an accredited investor you must meet one of the following criteria:
- Net income before taxes must exceed CA$200,00 in each of the two most recent years (CA$300,000 combined with a spouse) and have a reasonable expectation of exceeding the same income threshold in the current year.
- Net assets exceeding CA$1 Million as an individual or with a spouse and must exclude the value of a primary residence.
Hong Kong
In Hong Kong, DFLX relies upon the exemption of securities to publish a prospectus by ensuring that CFI NFT’s are only marketed to Accredited Investors*
*To be classified as an accredited investor you must meet one of the following criteria:
- Possess a portfolio of investments valued at HK$ 8 million or more
- Hold a valid professional qualifications such as being a licensed securities dealer, investment adviser or asset manager
- Have relevant investment experience, as evidenced by having executed transactions of a certain size or frequency over a specific period.
Israel
In Israel, DFLX relies upon the exemption of securities to publish a prospectus by ensuring that CFI NFT’s are only marketed to Accredited Investors*
*To be classified as an accredited investor you must meet one of the following criteria:
- Own liquid assets including stocks, bonds, mutual investment funds, cryptocurrency and “kranot hishtalmut” worth over IL 8,364,177
- Your annual income of the previous two years exceeds ILS 1,254,627
- You ow liquid assets worth in total more than ILS 5,227,610, and your annual income for each of the previous two years is at least ILS 627,313.
Switzerland
In Switzerland, DFLX relies upon the exemption of securities to publish a prospectus by ensuring that CFI NFT’s are only marketed to Professional Clients*
*To be classified as a professional client you must meet both of the following criteria:
- You must have, at your disposal assets of at least CHF500,000 held directly or indirectly.
- You must possess the necessary knowledge to understand the risks associated with the investments (not required if the assets at your disposal are greater than CHF2,000,000)
Singapore
In Israel, DFLX relies upon the exemption of securities to publish a prospectus by ensuring that CFI NFT’s are only marketed to Accredited Investors*
*To be classified as an accredited investor you must meet one of the following criteria:
- Net assets must exceed S$2 Million in value or its equivalent in foreign currency.
- Your financial assets, net of liabilities, exceed in value S$1 Million or its equivalent in foreign currency.
- In the preceding 12 months, your individual income is not less than S$200,000 (S$300,000 joint income with a legal spouse) or its equivalent in foreign currency.
In using the DFLX P2P system to acquire CFI NFT’s you agree that you meet the qualifying criteria for your relevant jurisdiction. DFLX may, as part of our wider compliance protocol request proof of assets/income at any time during your use of the platform.
Due Diligence, Protections and Recovery
Prior to any listing on DFLX, a 3rd party lister must go through a thorough, two tier due diligence process performed by both DFLX and an external 3rd party. This includes background checks on founders including financial, project viability assessment, financial assessment of the underlying project company and fact checking of any statements made. Only when satisfied with the output of the due diligence process will a 3rd party be allowed to propose a listing for CFI NFT’s on DFLX.
Whilst any agreement and liability remains between the investor and the underlying company, DFLX takes the following steps to protect investors.
- Where there are issues relating to the viability of the project and the offered returns, founders must provide security of a minimum 6 months cumulative rewards, this can include cash deposits or lien over security. In the event of a default on obligations, DFLX will act as a recovery and disbursement agent upon collection of the security.
- Agree the rewards as a credit provision between DFLX and the 3rd party with adequate credit default insurance obtained.
DFLX does not make any guarantee over the ability to satisfy all promised returns in the event of a default on obligations but will take the above actions to ensure the best possible outcome for investors.
For CFI NFT’s in the TradFi space we only list assets and asset classes that have an underlying physical asset guarantee that is greater than the cumulative returns value. Should an asset within an asset class default in their obligations, DFLX will work with the listing agent in foreclosure and disposal processes.
Listing Volume
DFLX retain all funds on behalf of the listing parties until the NFT’s have sold in entirety. If the NFT’s do not sell out by the listing expiration DFLX will conduct further due diligence to determine if the project is able to fulfil it’s end goals with the volume accrued, if they can then the the funds will be released, if they cannot then the funds will be returned back to investors.
Migration to DAO
In late 2025 to early 2026 it is planned that the project evaluation and approval element will transition to a DAO based system with votes being weighted for buying activity on the DFLX platform.