6-3. Review of issues related to securities properties

A. Token economy

This whitepaper planned to issue 1 billion tokens (100% of 1 billion RCG), and it is confirmed that they were actually issued. The functions and uses of RCG tokens shown in this whitepaper are used

as points in blockchain-based charge and recharge governance and services connected to the Recharge Token-based ecosystem, and they have secured the ease of moving between multiple mainnets with their own cross-chain, which is their characteristic. It is confirmed that they function as a means of value exchange, such as converting into carbon redemption points (CRE) using the automatic retirement function.

According to this whitepaper, the core of this platform is built around the Piggy Cell service, and it appears to function as tokens used in their operation to establish a form connected with offline charging facilities and their ecosystem.

B. Review of the Financial Investment Services and Capital Markets Act (or simply 'the Capital Markets Act')

1) Introduction

Since tokens will be issued and distributed online and there will be no border restrictions. However, since the Capital Markets Act applies even if their effect reaches Korea as a result of an act performed overseas (Article 2 of the Capital Markets Act), the nationality of the corporation Regardless, there is room for being subject to regulation under the Capital Markets Act regardless of the nationality of the corporation that does the business.

Therefore, it is necessary to determine whether the RCG token is a financial investment instrument under the Capital Markets Act. So, we will review the characteristics of the RCG token based on the Swiss FINMA guidelines.

2) FINMA Guidelines

Although the government has defined virtual assets in the Act on Reporting and Using Specified Finan- ceial Transaction Information, there is currently no definition of the relationship between 'virtual assets' and 'securities' under the Capital Markets Act.

The guidelines of FINMA, which are practically used have classified tokens into three types based on their economic function. Since the three classifications below are not mutually exclusive, hybrid tokens with two or more characteristics are possible. In this case, the applicable requirements are cumulative.

A. Payment token: A means of payment or remittance to acquire goods or services

B. Utility token: A means of providing digital access to an application or service through a block- chain-based infrastructure

C. Asset token: A token that holds rights to an issuer's assets, such as liabilities or equity. It is mainly classified as securities instrument.

In the case of RCG token, according to the FINMA standards, it is judged as a means of payment or a substitute for rewards for using the service of this platform. Sine the coin itself does not seem to be

a token that holds rights to assets, It is difficult to judge that it belongs to an asset token.

However, since the FINMA standards are not legally effective, but only informative, it is necessary to additionally determine whether the coin is a 'financial investment instrument' that is subject to the Korean Capital Markets Act.

3) Judgement on financial investment instrument properties

According to Article 3 (1) of the Capital Markets Act, a 'financial investment instrument' means acuired rights by promising to pay with money or something of property value at present or in the furture for the purpose of obtaining profits or avoiding losses. Namely, it has to have 'investment properties.'

In the case of RCG token, as a virtual asset its scheduled issuance amount is fixed, it is distinguished from digital data that is created and traded indefinitely, and it has the possibility of exchange with real money. Thus, its property value is recognized.

However, in the case of RCG tokens, (1) in terms of transaction motives, it is not aimed at making profits by trading them. Of course, there is a possibility that token holders can freely trade this token, but this is not directly related to the purpose of development. It may be said that though general merchandise is made for use or consumption, not for investment, it is in reality traded freely. (2)In relation to 'monetary gain', the token in question is not paid in exchange for money, but is a case where there is no payment of money of investors just like a coupon. So, it does not belong to a financial investment intrument. (3) With regard to 'investment properties', it may be said that it is difficult to find investment properties when only the internal structure of the token in the whitepaper is considered. Since platform users of the token ecosystem in which this token is provided only acquire tokens as compensation for the services they have consumed, so it is difficult to assume the possibility of losses. However, even if the initial acquisition was made free of charge, if there is a person who takes over it for a fee, there may be a possibility that the investment property may exist because the price may fluctuate depending on the transaction situation.

As such, it will be said that the token in question is difficult to qualify as a financial investment instru- ment because it lacks some of the requirements of the general definition of a financial investment instrument. Since Article 2 of the Capital Markets Act divides 'financial investment instruments' into two kinds: 'securities' and 'derivatives'. If it does not fall under any of these two categories, it may not be said that the Capital Markets Act applies to it.

4) Judgement on securities properties under the Capital Markets Act

According to the Capital Market Act, 'derivatives', a kind of 'financial investment instrument', are premised on 'basic assets' in concept. Since RCG tokens are not based on basic property, it may not be 'derivatives.' In the end, whether RCG tokens fall under Article 4 of the Capital Markets Act as 'securities' or not determines whether the Capital Markets Act applies.

Article 4 of the Capital Markets Act defines 'securities' as 'a financial investment instrument for which an investor does not bear any additional payment obligations in any pretext other than money paid at the time of acquisition'. It is classified their types into equity securities, debt securities, beneficiary certifi- cates, investment contract securities, derivative-linked securities and depository securities.

A. Equity securities (stock certificates): In the case of representing assets, etc. for a company or if dividends for voting rights are included for decision-making

B. Debt securities: When a coin represents a debt to a person or debt to a company

C. Beneficiary securities: Securitization of beneficiary rights generated under the trust contract

D. Investment contract securities: For investor protection, they are judged on (1) The purpose of earning profits for investors, (2) Investments in money, etc., (3) Investment in common matters performed by others, (4) Possibility of the loss of the principal, (5) Atypical securities (according to a reply from the Financial Services Commission)

E. Derivative-linked securities: linked with changes in index, etc.

F. Depository securities: Securities issued by the Korea Clearinghouse

When reviewed by the securities properties of RCG token, it is difficult to regard it as equity securities since it is not be granted any right to dividends or ownership of company assets. It is only imited to the right to use the platform or the right to use the service. There, it may not be equity securities.

In addition, as there is no obligation to pay principal or interest, there is little room for debt securities. According to the whitepaper, no trust has been established, so it is difficult to see it as a beneficiary certificate. Since no securities outside the ecosystem have been made to be deposited, it is difficult to view them as depository securities. According to the whitepaper, it is difficult to consider it as a deriva- tive-linked security because it does not plan a form to be linked to index fluctuations.

In the end, it is necessary to see if there is room for investment contract securities. There is no excluding the development of the block chain platform itself may be included as a 'joint project', and if the concept of 'mainly gains and losses from the results of joint projects performed by others' is broadly interpreted, the possibility OOof falling under this category may not be ruled out.

However, whether it belongs to securies under the Capital Markets Act must be strictly interpreted with- out any analogy since it is used as the standards for determining whether punishment and administra- tive sanctions are applied (Supreme Court, ruled on September 10, 2015, 2012DO9660), there seems to be a low possibility that financial agencies may apply a broad interpretation.

In the case of RCG token, according to the contents of this whitepaper, it seems that the revenue gener- ated by this platform does not belong to the coin holder or does not give him/her the right to claim it just because the RCG token is acquired. Therefore, as long as the possibility of amendment or extended interpretation of the Act is excluded, the possibility of the token being an investment contract security under the current Act seem to be low.

Therefore, based on this whitepaper, since it is difficult to evaluate RCG tokens as financial investment instruments, that is, securities or derivatives under the Capital Markets Acts, there seems to be a low possibility that it may bring up issues involving the Capital Markets Act in case they are listed in the exchange institution for circulation.