Oleksandr Strelnykov

Hello! First of all, I thank every reader for their love and trust in the publication, as well as criticism and feedback. Every day, my team and I think of you: when we draw up a content plan, brainstorm topics for materials, ask questions during interviews, develop a strategy for the next year, respond to reader inquiries by mail. Thank you for your interest in our work, which allows us to develop.

I’ll start with the results. From October, together with the new management, we are preparing a major transformation of AIN.UA (more on that later). Because people and processes are at the heart of everything, we started with just that: an audit of the current situation in the publication and the mood in the team. Unfortunately, several powerful editors who have been building this project for many years have left, and I want to sincerely admit that this was a blow to me and the whole team.

At the same time, new people joined the publication: Mariia Molodkovets, who became the editor-in-chief of the news section, journalists Anastasia Opryshchenko and Sofia Yelagina, news editor Vira Oliynyk. Right now, we are also looking for specialists to strengthen AIN.Business and AIN.Capital. Another important piece of news for the project: a professional and energetic editor Rostyslav Sobachynskyi is heading the English-language editorial office of AIN.Capital. There will be many more new hires in 2024, so keep an eye out for our vacancies.

In addition, the editorial policy and the document with the ownership structure are already ready, which we will present after the restart of the project. It’s about transparent rules and earning your trust.

A powerful step of our commercial department was the complete refusal to advertise HR-brands of gambling and betting services. And we completely abolished the content translation into Russian. Not only we stopped updating the feed, but also started translating archival materials into Ukrainian.

Also, we moved to a new office, reviewed salaries, set up work tools and are ready to spread our wings — so let’s move on to our plans.

Our main goal for 2024 is to provide regular institutional assistance to the Armed Forces of Ukraine. This is our duty as a responsible media business. As soon as in January, we will launch a fundraising for FPV drones for the 92nd Assault Brigade squadron “Achilles”, which will help them destroy our enemy. And much more to come: funds, money for the Armed Forces, equipment, and pain for the Russian occupiers.

At the end of the first — the beginning of the second quarter of 2024, we plan to launch a new website for the publication with an updated identity and new sections — this is part of the transformation I mentioned earlier.

Why do we need a new website? My personal desire as Editor-in-Chief is to develop the brand AIN as a “desktop media” of progressive and educated people who make important decisions for the country and business every day, launch their own startups, invest in promising projects, work in creative industries, and the technological sphere. Such media, which will cover all your informational needs on a daily basis. In order to do this, we will expand the topics focus: more about real economy, explainers for the investment and development of startups, analytics, military-tech, scientific articles, urban planning, reports from productions, devices reviews, cars and software products, and much more.

This requires new technical capabilities from the website: better performance, more flexible setting of the appearance of the main page, built-in interactive dashboards, tests, tools for live text broadcasts, etc.

We will also present the updated identity and design of the website. We will make it more “spacious” and more modern, with a greater emphasis on visual elements. In this, we are inspired by the progressiveness of Western technological media and the image quality of the world’s most authoritative printed publications.

On the website, you will also find in-depth investigations, detailed analytics on the state of the technology market, and an updated “Jobs” section, which we will make as convenient and practical as possible for candidates and recruiters.

Another direction of work is the development of our YouTube channel with exclusive interviews, explainers, reports, so that you can receive information from us in video format, clear and honest.

The last of the big plans I want to talk about is that we will be launching a Community section. This is a reader’s forum where you can discuss professional and everyday topics, read columns from leaders of public opinion, businessmen and investors, as well as chat with our editors.

I pass the next lines of this column to Artem. And I wish everyone victory in the new year.

Artem Starosiek

Hello! It was the most difficult and interesting three months of my life. I want to start by thanking the Editor-in-Chief Oleksandr Strelnykov, the Editor-in-Chief of AIN.Capital Rostyslav Sobachynskyi, the Editor-in-Chief of AIN.Business Tania Hrytsyk, the publishing editor Olia Zakrevska, CBDO Yana Protsenko, and COO AIN.UA Daria Verbytska, who liked the new strategy and who believed in change. Judging by the increase in traffic and the number of advertisements, advertisers and readers also believed in these changes — thank you! Special thanks to the competitors on the market who helped and kept me in good shape 🙂

I will reveal in more depth several key changes that you were able to see on AIN.UA recently.

The team transformation

Many colleagues from the media sphere and advertisers were interested in the changes in the team. In my opinion, personnel changes under the new management, without changes in the editorial policy, is normal.

There are several reasons:

1. Growth requires sustainable processes: legal, financial, digital, and HR. This has been my main focus for the past three months.
2. We build media with approaches typical of IT companies: evaluation of achievements, not regalia, an extended social package, constant reviews of income, a nice office.
3. Everyone does their part, instead of being a superhero who works for three.
4. Values are sometimes more important than hard skills.
5. A business should be a sports team, not a family. This is the only way from to build a startup into a systemic business.
6. “Fresh blood” helps with solving problems for which there seemed to be no solutions.

Refusal to advertise gambling

AIN.UA previously advertised HR-brands of gambling and betting companies, these were the only advertising manifestations related to such businesses. In November, we stopped this process. In addition to the ethical component, there is another reason — the negative impact of gambling on the military. This is unacceptable for us. We will always choose the reputation and trust of the reader. This step is only a continuation of the strategy, because AIN.UA has used Know Your Customer procedures for years and checked who the media advertises. Our advertising blacklist includes “air traders”, alcohol and tobacco brands, politicians, and Russian companies.

As a result, there is a stream of advertisers who appreciate our choice. If you add to this the team under the leadership of Yana Protsenko, which makes the most successful sales on the Ukrainian market, it is quite possible to break even and be profitable.

If for our colleagues in the market gambling and betting is a matter of survival, then for AIN.UA it is a valuable choice that will not significantly affect revenues from advertising, because previously such clients made up less than 5% of the revenue structure. Win-win.

Instead of conclusions

In December, I sat in a dark hall at the graduation party of the Ukrainian School of Political Studies. The second year of the war was coming to an end. On the stage is Oleksandr Yabchanka, senior lieutenant of the “Honor” squadron of the “Wolves Da Vinci” battalion named after Dmytro Kotsiubailo, and a 2018 graduate of the Ukrainian Military Academy. He had an unusual dialogue with himself, only from 12 years ago, when Oleksandr was a pediatrician, an assistant at the Department of Pediatrics. Oleksandr the Pediatrician wore rose-colored glasses and asked questions like “When will the war end?”, “Will everyone be mobilized?”, “We have already endured in March 2022, so can we now relax?”. Oleksandr with the call sign “Yabchanka” took off these glasses, painted a picture close to the inevitable end and called for the general mobilization of society and systematic support of units. At the end of the dialogue, Oleksandr the doctor decided to join the ranks of the Armed Forces.

I have similar thoughts: in addition to donations, which are already a norm of public morality in our country, and not an excuse for PR, every business must become a business of war. A bakery — to bake pastries for the frontline, an IT business — to develop software for artillery and military control systems, media and bloggers — to enlighten society, provide analytics to counter the PSYOPS and fakes, and fight the occupiers with words.

That is why in 2024 you will see even more analytics, investigations, progressive and socially responsible businesses that professionally help the Armed Forces of Ukraine on AIN.UA, as well as AIN.Business and AIN.Capital.

I want to share our journey at Claid, how we taped uncharted territory, and leveraged generative AI. Claid’s mission is to fully automate end-to-end image creation and editing and boost e-commerce through our suite of AI products.

Our latest achievement on this front is AI Photoshoot, a tool that harnesses a blend of AI technologies to effortlessly generate lifestyle scenes from simple product shots. But how exactly does it work out for us? And what motivated us to create it?

Our Origins: Let’s Enhance and Claid.AI

The company began in 2018 with Let’s Enhance, an AI tool that took low-resolution images and made them look way better. It is based on GAN networks that were able to restore details and enhance images. We were working with generative AI before it became hyped.

While customers loved Let’s Enhance, and the product grew to over 5 million organically, after doing our due diligence on e-commerce, we found a real need for better product photography, an even bigger opportunity in helping businesses. That’s when we decided to create Claid.ai, a platform for automating image editing in large marketplaces.

Embracing Uncertainty: Leap into Generative AI

By 2022, Claid.AI had gained traction: we started signing contracts with some of the fastest-growing online marketplaces. At the same time, we paid close attention to market trends and emerging technologies, searching for opportunities to get exponential growth faster.

The breakthrough in generative AI with technologies like DALL-E 2 and Stable Diffusion have finally created fresh opportunities for companies to tackle problems they couldn’t solve before.

Those systems, capable of creating photorealistic images from text prompts, resonated with our core competence in image enhancement but posed a new challenge: How do we integrate them into our products?

We went into full brainstorming mode. The ideas ranged from generating slides to creating personalized photobooks.

We ranked our ideas based on market potential, feasibility, and strategy compatibility. After a lot of back and forth, we picked the generation of product photo scenes as a target direction to explore.

Estimating the Opportunity: Diving in

Discovering the chance to create AI-based lifestyle product photos, we paused to size up both the market and our abilities before diving in. Here’s what guided our decision to proceed:

Understanding the Market:

• Size: The market was even bigger by expanding our value proposition, yet untapped by competitors.
• Growth: The market is fast growing, signaling more opportunities for success.
• Competitive Density: The field was open, with plenty of room for us to make our mark.

These factors painted a clear picture: the overall market attractiveness was high. It wasn’t just about the numbers; it was about the vibrant potential we saw in this space.

Analyzing Our Strengths:

• Integration with Existing Products: With our roots in e-commerce and existing clients, this new venture felt like a natural extension of Claid.AI.
• Competition: No one else was using generative AI for e-commerce photography at that time. It was a gap we were eager to fill.
• Shared Capabilities: Our existing expertise in technology and industry knowledge meant we weren’t starting from scratch. We had a foundation to build on, and our established brand added extra weight to our position.

Combining the insights from the macro-level market analysis with our micro-level understanding of our own capabilities, we saw more than just a new product idea. We saw a pathway that aligned perfectly with where we were and where we wanted to go.

It all added up: The Total Addressable Market is over $10 billion (Marketing budget in e-commerce that is allocated to visual content creation). The new market’s size, its growth potential, and the competitive landscape all pointed in the right direction. Our skills and brand could bridge the gap between ideas and reality.

Gathering First Insights

Our focus settled on a shortlist of ideas, from generating product photo scenes to food photography and virtual car showrooms. This decision was based on our strategic goals within the realm of generative AI.

Here’s how we went about it:

• Selecting Multiple Ideas: After brainstorming and evaluating strategy, we decided to explore 3 applications: product photo scenes, food photography, and virtual car showrooms.
• Launching Landing Page and Collecting Data: We simultaneously launched a landing page featuring these ideas and integrated a Typeform survey.

The primary goal was to validate interest and identify who our main customer segments might be.

• Driving Traffic: We directed traffic to our new landing page, leveraging our existing brands’ popularity. Then, we collected user requests with Typeform, using questions like “Can you give some examples of how image generation could be helpful for your business?”.
• Customer Interviews: We sifted through Typeform responses to select individuals for more detailed interviews to understand their needs. For example, one of the build interview questions was: “What does your workflow look like when you create visual content?”  “What challenges do you face in visual content creation?”
• Identifying Common Challenges: After about 30 interviews, we saw a pattern: the difficulty of consistently creating engaging content for social media.
• Refining Focus: Using these insights, we adjusted our landing page to focus more on helping brands to create lifestyle product photos.

After completing the research, we adjusted our positioning, which was reflected in the new landing page messaging.

Technological Challenges 

While we were doing business research, the tech team needed to create a proof of concept and validate the feasibility. In the beginning, we had to take some big chances. We knew that people wanted good product photos and that the technology had amazing potential, but we didn’t know if they would work well together. The core issues we faced were:

• Preserving the Product: Off-the-shelf AI models distorted products by altering labels, textures, shapes, and so on.
• Overgrowth: Edges of objects would sometimes get bigger or change in uncontrolled ways.
• Misplaced objects: Items didn’t always look naturally placed, or were “floating in the air.”
• Adjusting the Lighting: Beyond placement, the lighting had to be calibrated so products didn’t look artificially pasted in.
• Noisy Background: Not always did AI generate good results, we also got from time to time some weird generated patterns by the network.

“The problem at hand has unique challenges that make it research intensive. This can be seen as a desirable entry barrier for competitors that don’t have the traction in the fundamental technologies involved.”

Carlos Sánchez Mendoza, Head of AI.

We needed to address these issues to maintain the product’s true appearance and high resolution details, which was crucial for e-commerce. We knew that overcoming them would be key to delivering a product to the market.

We tried different things, and when a new version of the tech came out, it helped a lot. We kept tweaking and fine-tuning, and finally, we got product photos that we thought were good enough. 

It was a risky journey, but we believed in the tech and the need for better photos, even when things got tough. By January, we had an imperfect, but functional alpha version of AI Photoshoot.

The Race to Be First

The advent of generative AI sparked a competitive race among companies. Everyone was trying to stake their claim, even before they had a fully ready solution.

Sofi Shvets – our CEO – and I visited an AI hackathon by HF0, and it was a moment of major insight for us. Surrounded by hackers and innovators, we found a room with a team working on a project like ours and a PM from a huge company focused on solving a similar problem.

The experience was a wake-up call. Being a distributed team, we focused our attention on building the product and weren’t exposed to such intense competition. But in San Francisco, we found that we weren’t alone; several teams were working on similar ideas. The hackathon taught us that a great product alone wasn’t enough: building and early marketing must go hand in hand for swift and efficient market competition.

These experiences underlined the need for us not just to identify our product-market fit and build high-quality products, but to quickly differentiate ourselves, and beat the market.

Iterating with Early Community

Just two months in, we launched AI Photoshoot as a closed beta. With a new landing page we continued to gather a more focused audience. The product was raw, but it had core functionality (transforming simple product shots into lifestyle scenes using a blend of AI technologies) and allowed us to gather the community of beta testers and iterate our product development based on customer feedback.

It was essential to build a product based on short feedback loops with customers. Which allows us to check if there are any gaps or challenges in user experience. We learned the importance of that from Let’s Enhance when the AI technology was new and users didn’t know how to use it. 

We conducted a second interview round combined with a product demo, where we asked more specific questions related to the problem we solved, helping businesses with their marketing, for example: “How do you engage and acquire customers?”

To speed things up, we moved to weekly sprints, making incremental progress each iteration and using each round of feedback as an opportunity to improve.

What we changed based on user feedback

One of the biggest insights/changes: We intended to display the B&W of the image to help our customers understand that the AI would be guided by the composition of the image, but every time they will get the newly generated results. But, during user testing, customers expressed that they didn’t require black-and-white backgrounds. Our Product Designer proposed a radical solution at that time. She explained that people don’t think in steps; they expect to see the final possible result. We implemented the solution and saw much bigger engagement with the product.

“I came to the realization that UX design in AI tools should not adhere to implementation logic, as it can be too complex for users who are not familiar with the development process. Instead, design should align with the mental model of the customers and how they expect to interact with the product.”

Anna Prodvoiska, Principal Product Designer

We also made what can be perceived as small changes,  and they were  essential to provide flawless product adoption. 

Prompt Box Improvement:  Users often confuse our prompt box with those from ChatGPT. For instance, they would type commands like “place product on a table” instead of describing the scene. To enhance clarity, we improved the message and provided an example.

Changed Sidebar: Initially, we had a black sidebar as a part of the UI, and on user testing, we found that people completely ignored template space. 

Based on user feedback, we fine-tuned our product, making it ready for public release.

Public Release

We aimed to launch at Shoptalk, a major e-commerce event, on March 30th, 2023, and to debut the first public version of AI Photoshoot on Product Hunt at the same time. 

Our booth attracted constant interest throughout Shoptalk. Hundreds of excited attendees kept us busy, eager to learn how AI could upgrade their product shots. The public release marked months of effort in transforming our initial AI concept into a polished tool for photorealistic imagery.

This new product has shifted our company’s focus. We’ve updated our landing page to better share what we’re now offering. It’s showing a 90% growth rate month over month, making it our fastest-growing initiative. Yet, it’s not just about numbers; we’ve evolved our initial MVP into something much more — photorealistic product imagery — in just six months.

What We’ve Learned So Far

We took a calculated risk by diving into generative AI, and it works well for us. It wasn’t easy, but we navigated through the tech challenges and market uncertainties to build something meaningful.

One thing is clear: there will always be competition. Today or tomorrow, someone else will try to do what we’re doing. That’s why we keep our eyes on what really matters — our customers. This project has taught us to get moving quickly, start selling as soon as possible, and not to hold back on letting people know what we’re up to, even in the early days.

⠀

Written by Serhii Zinchenko,
former Founding Head of Product at AI startups Claid.ai and LetsEnhance.io.

AIN.Capital spoke anonymously with the members of this group about their activities, goals, and methods.

Tell us about your group. How long have you been working together, what are your main goals?

As a group, we got together around mid-March 2022, and by the end of May, a couple of other people had joined us to form the final line-up.

Our goal: to damage the infrastructure of the Russian Federation, destroy supply lines, so that Russians can feel the war for themselves. As you know, defacement and other public actions are a way to forcefully bring the real state of affairs and prospects in Ukraine into the Russian public notice.

Later, we came to the realization that through the creation of a media entity, we can motivate other interested and talented people conduct such operations, and have a little fun, that’s how our Telegram channel started.

How do you choose the targets to attack? Is it some of the most visited sites, critical infrastructure sites, etc? How do you choose topics for messages (for example, Danilov in front of the Kremlin)?

I will not describe the algorithm for selecting targets for non-public attacks. But for public ones we involve used material from which nothing can be extracted, except for a dump of data (which we no longer need).

As for the messages, there are several levels: to convey information about the state and prospects of Russians in Ukraine, to achieve virality and memeability, so that this message gets to the official and unofficial Russian mass media. Danilov is a great example. We really like his suit.

Besides defaces, do you do something deeper (deface as something to grab attention while a more serious operation is being carried out)?

Yes, we do, but there will be no details.

How are the Russians doing with security in general? Do Bellingcat’s jokes about their “moscow1”, “moscow2” passwords sound like the truth? Is it hard to break?

Difficulty varies greatly from object to object. Of course, cases like “admin/admin” or “admin/Muhh@mad1” still happen, but this is more of an exception. I can say for sure that since the beginning of the full-scale invasion, the Russians have become more concerned about the security of their infrastructure. And the complexity is increasing over time. However, I cannot say that the same applies to their websites.

What are your strategic goals, how long do you plan to work in this direction?

Our strategic goal is the decolonization of the Russian Federation. However, as you know, it depends more on the Armed Forces, Ukrainian diplomacy, and the enslaved peoples of the Russian Federation. It’s just that we are moving in that direction with the forces and resources that we have.

Is there anything you would like to add for the readers?

If anyone wants to say or ask us anything, here is the contact email — hdr0_one@proton.me. Maybe we will get together and publicly answer some reasonable questions in our Telegram group. We’ll think about that.

More articles about Web3 legal issues you can read in Legal Nodes blog.

What is a Token Cap Table?

A Token Cap Table is an essential component of any tokenomics. It contains information about the total token emission and the division of tokens into different pools and explains the distribution methods.

This information, similar to an Equity Cap Table in traditional (Web2) startups, is usually presented in the form of a table. A Token Cap Table is instrumental for determining the company valuation because investors use it to decide on the investment amount and calculate the expected number of tokens.

More articles about Web3 you can read in Legal Nodes blog.

What types of token pools can be included in a Token Cap Table?

We can categorize token pools into two groups:

1. default token pools, which are present in practically all Web3 projects “by default”; and
2. custom token pools that are reserved for specific participants of the project’s ecosystem.

Default token pools include the following:

1. founders’ pool – tokens reserved for the founders of the Web3 project;
2. team & advisory pool – tokens for employees and advisors;
3. investors’ pool – tokens for fundraising; and
4. community pool – tokens for the community members, such as ambassadors, users, contributors, creators, etc.

Examples of custom token pools:

1. validators’ pool – tokens for transaction validators in the blockchain protocol;
2. oracles’ pool – tokens for oracles validating cross-protocol transactions; and
3. liquidity pool – tokens that are used in smart contracts in DEX, DeFi, and token swaps, which provide liquidity to those services to make it possible to exchange one virtual asset into another.

How do you distribute different token pools?

Each token pool has its final recipient and a distribution method. For the founders’ and team pools, this is often the allocation (reservation) of tokens via Token Options with vesting. SAFTs or private token sales are the preferred distribution mechanism for the investors’ pool. Tokens for the team and investors are sometimes also subject to a lock-up, a prohibition on selling the tokens for some time after the execution of the Token Option or SAFT conversion.

You can distribute the community pool via channels such as airdrops, launchpads, public token sales, staking rewards, etc.

Here’s an example of a Token Cap Table for a Web3 project:

Why is a Token Cap Table important for Web3 projects’ fundraising?

There are three reasons why a Token Cap Table is vital for your Web3 project’s fundraising:

1. investors want to know how the project’s tokenomics will work. The Token Cap Table is a key component of Tokenomics and therefore has a big impact on it;
2. investors want to know the valuation of the Web3 project, which is later reflected in the SAFTs/SAFTEs. It is impossible to determine a valuation without knowing both the total token emission and its allocation across different pools; and
3. investors want to understand how you legally structure the token distribution from different pools (this is often a part of the investor’s Due Diligence).

The final point is closely related to choosing the proper jurisdiction for a Token Issuer Company incorporation. You need to understand the regulatory requirements imposed on the distribution of each token type because these requirements affect the legal documents you’d need to use for the distribution and the requirements for token purchasers’ verification. 

How to get help with structuring your Web3 project

Although structuring your Web3 project might seem hard, it’s quite simple if you follow the best practices that we distill in our Web3 resources center. 

If you’re at the point where you need help with the legal structuring of your Web3 project, consider booking a Legal Discovery Session with Legal Nodes. 

During the session, you will get:

• an intro to crypto-friendly countries – specifically which ones may be the best jurisdictions for your project;
• an intro to token legal design to better understand all the implications of issuing a token; and 
• a checklist of all the tasks to be completed, to legally structure your Web3 startup.

Written by Nestor Dubnevych, co-founder & COO of Legal Nodes

More articles about Web3 legal issues you can read in Legal Nodes blog.

What are Decentralized Apps (DeFi, GameFi, SocialFi and other FI+ projects)?

Today, the number of Web3 projects running as DApps (Decentralized Applications) is multiplying. These include:

• DeFi (staking, yielding, crypto lending applications);
• GameFi (play-to-earn games); and 
• SocialFi (move-to-earn, social platforms for creators, such as NFT platforms, etc.).

Many analysts predict that these applications will become an indispensable element of the metaverse, to which the world is moving towards everyday.

Most DApps are a set of smart contracts developed by a group of enthusiasts. Each DApp smart contract is responsible for the autonomous operation of a specific part of the DApp, including:

• various transaction algorithms (token issuance, token mining/minting, token swap);
• the formation and storage of Treasury, reserve funds and liquidity pools, which are automatically filled with virtual assets following the rules programmed in smart contracts;
• the participation of key contributors and stakeholders of the DApp ecosystem (validators, oracles, supervisors, guardians) in a DAO (DAO members can vote with private keys to change the rules of operation of specific smart contracts and manage the Treasury).

The legal status of DApps

These smart contracts are usually uploaded (deployed) once to the blockchain network (e.g., Ethereum, NEAR, Solana, etc.) and operate entirely autonomously. These decentralized applications (smart contracts) do not require administrators, servers, domain providers, etc. They “live” in a blockchain network and operate autonomously, without the need for human intervention and centralized services for their storage and operation. That’s why DApps are also called “on-chain entities”.

Since DApps do not have owners, administrators or other final beneficiaries and are entirely autonomous applications, they require a particular approach to their legal structuring to create an effective Legal Wrapper for them to operate in real-world business.

Why do DApps need Legal Wrappers?

When Web3 founders begin working on their DApps, many don’t see the need to create any legal structures for their DApps–these applications are decentralized after all, so what legal structuring could they need?  Well, most Web3 founders will need their fully decentralized Web3 projects to interact with the outside world, and this is where a proper Legal Wrapper is essential.

“Real-world” or “off-chain world” interactions could include:

• creation of centralized interfaces for DApps (even though smart contracts make DApps “live” autonomously in the blockchain network, for users to interact with them, these DApps need user-friendly interfaces; usually in the form of websites, mobile applications with their subsequent listing in application stores, browser plug-ins, etc.);
• connection of payment gateways for the conversion of virtual assets, which can be obtained (mined, minted, swapped, staked) in the process of using DApps, into fiat currencies or other virtual assets;
• fundraising with the use of tokens (when attracting investments in a Web3 project involves not only the allocation of shares but also the allocation of tokens, and investors ask which company will sign SAFT or other investment agreement on the part of a Web3 project); and
• distribution of tokens by listing them on crypto exchanges or launchpads (exchanges ask a Web3 company to undergo KYC for token listing) and using tokens in Token Incentive Schemes for team members and advisors.

In all of the mentioned cases, founders will need to build “legal bridges” between an entirely virtual autonomous DApp and centralized market players such as application stores, payment systems, centralized exchanges, venture funds and others.

The legal structure of a Legal Wrapper for DApps

As mentioned above, DApps do not have centralized administrators or beneficiaries. Thus, all DApps are ownerless (ownership-free) and permissionless (moderators-free) applications. This fact, in turn, creates the need to build an ownerless (ownership-free) legal structure for DApps.

Building these “legal bridges” for a DApp to interact with the outside world usually implies registering a group of companies around a DApp that will function as a “legal wrapper”. Each of these companies has its own purpose and “area of responsibility” to ensure the interaction of a DApp with the outside world. Here’s a common example of a structure for these companies:

Development Laboratory Company

Generally speaking, there are three types of companies required to build a Legal Wrapper for DApps: 

1. a Dev Lab Company;
2. a Token & Product Distribution Company; and 
3. a DAO Company.

Each of these companies acts as a service provider for a DApp, creating the legal conditions for a DApp to interact with the outside (off-chain) world.

For Web3 founders to start developing a Web3 project, they need to hire a team of software engineers who will develop smart contracts for a DApp, create the interfaces and provide the technical support. Founders will need to set up the salary payments for developers. For this purpose, the Development Laboratory (Dev Lab) Company is usually registered, which, in addition, also performs other operational tasks like renting an office, paying for software subscriptions, accumulating IP rights, etc.

Product & Token Distribution Company

When Web3 founders open a new round of investments and offer Web3 funds not only company shares but also tokens–they will need to create a Token Distribution Company. This is because the Web3 funds will want to know which company will be specified in the investment documents.

This Product & Token Distribution company is also responsible for listing tokens on exchanges and launchpads. Most token listing platforms require a Token Legal Opinion, which, in most cases, cannot be prepared without a registered legal entity (such a legal entity is usually responsible for token distribution through the exchange).

DAO Legal Wrapper as a part of the legal framework for DApps

Suppose founders of the Web3 project decide to create a DAO around their DApps. In this  case, they will probably want to provide DAO members (usually key contributors to the DApps ecosystem) with the right to participate in decentralized governance and Treasury management. DAO members exercise this right with the help of private keys following the algorithms of the DApp smart contracts.

Creating a DAO company addresses two main legal needs:

1. It helps to create a Legal Wrapper for DAO members, which aims to limit (protect) DAO members from judicial, tax, financial and other liability for the activities of such DAO. Otherwise, DAO may be recognized as a general partnership, which will result in the unlimited liability of each DAO member for the activities of the DAO.
2. It ensures compliance with the procedures in cases of Treasury management, for example, ensuring AML & KYC procedures for the issuance of grants from DAO Treasury, etc.

DApps need legal structures

A well-established legal structure for DApps will allow Web3 founders to solve the following key tasks:

1. Create “legal bridges” for the interaction of virtual autonomous (on-chain) DApps with participants in the outside (off-chain) world such as crypto exchanges, payment systems, application stores, etc.;
2. Distribute the responsibility for different components of a DApp between separate legal entities. To date, DApps regulation is at a very early stage, so to reduce the risks associated with regulatory uncertainty, responsibility for different DApp activities is shared between separate companies;
3. Protect (limit) members of the DApps ecosystem (developers, contributors, DAO members, etc.) from liability, similar to how traditional shareholding companies limit the liability of their shareholders and directors; and
4. Save the concept of the ownerless / permissionless structure of a DApp.

If you’d like to learn more about the process of legal structuring of DApps, we’re planning to run a webinar on this topic soon. Click here to leave your email and we’ll send you a link to register for the webinar once the registration is open.

Written by Nestor Dubnevych, co-founder & COO of Legal Nodes

“Thought it was all going to end in several days,” it might seem to be a quote from Christian Lindner, the German Minister of Finance. He gained wide notoriety after denying help to the Ukrainian Ministry of Foreign Affairs in a cynical manner on the first day of the war. However, this is not him. These words were said by Igor Bukhman, the co-founder of Playrix, commenting to Forbes on the belated, and in places still zero, reaction to the war in Ukraine.

The total wealth of the Vologda natives Igor and Dmitri Bukhman, who emigrated to London in 2020, is estimated at $16 billion. And Playrix itself, with annual revenue of $2.7 billion, is considered the fourth largest game publisher globally, after China’s Tencent, NetEase, and Activision. In Ukraine, Playrix employs about 1,500 people, who work in Kyiv, Rivne, Odesa, and Kharkiv, both for the company itself and for the studios that were mostly acquired by Playrix in 2020–2021. In total, there are seven studios — Zagrava, Boolat, 4Friends, Home games, Daily Magic, Perfect Play, and VOKI. The latter is part of the splintered Ukrainian studio ERS Games and its name, according to an employee commenting, is short for VOlogda KIev.

Playrix has another 1,500 staff in Russia, where the company emerged and earned its first capital. Apart from 10% of staff who relocated, there are no changes to expect. The lack of resolution of this issue has caused so-called “outbursts of uncontrolled hatred between employees.” In response to them, Playrix imposed censorship in the very first days of the war: “political” discussions have been simply deleted from the corporate Slack.

“We fear that, instead of dialog and support, in the working chats, there will be conflicts, which no one will benefit from,”

said Playrix in response to a query by its workers from an internal chat, as cited by the journalist Daryna Antoniuk.

“One of such decisions is to temporarily close all mass channels, except #company-updates and studio channels. It is difficult for us to communicate constructively on Slack. We don’t forbid anyone to express their opinion publicly. The only thing we’re asking is to keep at least a few channels for business communication,” Bukhman said in an appeal to employees.

“But this is ridiculous, because expressing one’s opinion is exactly what they would not let us do; they would delete all the comments. I saw that, and they also deleted mine,”

says a Playrix employee, who wished to remain unnamed, in her comment to AIN.UA.

“We are literally between two fires. It’s difficult for us to make decisions but we must do it,” Bukhman described the situation at the beginning of March.

“I don’t see the company change its position somehow over a month. Now, all chats are closed, except for the very official ones, where nobody but the management can write anything. Now it is so quiet in Slack, and it was never the case before,”

AIN.UA’s source reports.

The US Forbes says that the position of Playrix’s owners has evolved significantly since the “out of politics” stance of February 24. Indeed, a statement appeared in early March, its main quotes being, “what happens now is a tragedy” and “stop the war.” There is no need to explain to the Ukrainian audience that such words are but a good old lack of one’s own position. Who is it that Playrix’s founders ask to stop the war? In their opinion, who is to blame for the tragedy? It is unclear what evolution the US Forbes is referring to here. Besides, the founders understand this themselves too.

“On the social media, Dmitri and I have expressed our support to Ukraine in words that we could use. But we have 16 offices and 1,500 employees in Russia. We cannot speak openly now because we are responsible for our staff and families,”

Igor wrote to the employees on March 4.

Here we see an attempt to elicit sympathy and a repetition of the popular Russian narrative – the unconscious irrational fear of Russia. In fact, many dozens of companies, including those of Russian origin, have already made statements and are actively moving out from the country, while nothing threatens them or their families. It is hardly possible that people who were able to build a billion-dollar company cannot see or evaluate the events around them. It is also hard to imagine that, when the cynical plan A, “It is all going to end in several days,” didn’t work, the 4,000-strong company didn’t have, and in six weeks, didn’t come up with, a plan B. Of course, unless their plan B is to stay and keep silent.

The Bukhmans’ situation, as represented by the American Forbes magazine, does not evoke any compassion. Yes, they comment to media on how difficult their choice is, with the markers “we fear,” “it’s painful,” and “we are between two fires” being constantly repeated. But these are not emotions. It is precisely Russia that nearly 40% of Playrix’s $2.7 billion earnings come from. This is what the second line of fire from the Bukhmans’ quote “We are literally between two fires” actually means, and not the wish to protect their Russian employees, as Forbes puts it and as Russians themselves probably think.

When Lindner said to Ukraine on February 24, “You only have a few hours. Supplying arms or disconnecting Russia from SWIFT is pointless,” he also acted on the basis of cynical and pragmatical considerations. Except that Germany has changed its position since then.

DataArt

DataArt called this war “the war” and Russia “the aggressor” from the very beginning. However, its executives often use popular Russian narratives that are totally unacceptable to the employees in Ukraine and other countries.

Currently, DataArt has $290 million in revenue and 5,700 employees in total, including 2,000 in Ukraine and 1,700 in the Russian Federation. Our editorial board got a bunch of corporate briefs from the executives to the employees. For example, Alexei Miller, the Managing Director at DataArt, repeated in his letter dated March 14 the popular cliche that Russians are not responsible for the Russian government and that he acted for fear for Russia. For some reason, the companies are afraid of Russia more than of the risk of losing a good reputation both in Ukraine, where Miller and his team moved a long time ago, and in other countries. Here are four main ideas from the letter:

“If we fire or let our colleagues stay in Russia, Putin’s regime will only win and hire them to develop ‘national software.’”

“We are forced to be careful with official statements — now you can get 15 years in jail for a wrong word in Russia, lose your entire company that could be nationalized, and then we wouldn’t be able to help anyone.”

“Don’t believe the loud statements and press releases of competitors. They could say, “we left Russia.” It’s easy. But almost all of them kept their people working in Russia but under a different name.”

“Don’t equate Russians with their government.”

Eugene Holland, the CEO at DataArt, wrote a more serious letter at the beginning of April where he explained to the employees the real state of the case that Russian propaganda is trying to hide. According to this letter, DataArt acts following some undercurrents in the world economy and society, but not based on its own choice to cancel its activities in the country that attacked Ukraine on February 24:

DataArt did not have a choice regarding the exit. We can’t cooperate with what Russian government has become and we are also experiencing massive and accelerating difficulties sending money to Russia.[…] With a heavy heart, I must admit that change to the worst is unavoidable to such a degree that co-existence with the regime would not be possible for all groups of DataArt stakeholders even if it would be in our power to resolve technical issues. There is some inertia in the system, and the full impact of the change is not yet visible, especially from inside Russia, but the change has already happened for anyone who is willing to inspect it with open eyes. […] Cooperation with a Russia-based entity is now seen by the business elite (and increasingly business in general) as help to the regime. Businesses that could get comfortable with it are getting to be hard-pressed by employees and other stakeholders to stay away for the sake of depriving an aggressive state of the resources. We are already experiencing this escalating pressure on all levels: clients, investors, auditors. […] Those who decide to go, face a myriad of difficulties, including unfairly unfriendly predisposition by those who do not separate people from the state.

DXC/Luxoft

Holland’s letter looks more honest than the declaration of DXC/Luxoft that they are proud of leaving Russia, where the company has been founded and operated since 2000, where it developed solutions for the Federal Tax Service, Post of Russia, and Russian banks: Alfa-Bank, VTB, Promsvyazbank, and Sberbank.

The company with 3,900 employees in Ukraine made a statement at the beginning of March, but it’s not the end of the story. It appeared that the Russian Luxoft workers got offers in March to switch to another Russian company IT_One.

According to the job offers, the employees will keep their positions and projects, and only the management will change, a Luxoft employee who was among the first recipients said to Forbes.

Such a transfer was offered to those Luxoft employees who got no relocation offer, including specialists working for Russian customers of Luxoft. The source of Forbes said that the workers are allowed to keep their work computers, only set to default settings.

It also appeared that IT_One had another name in December 2020 — Luxoft Dubna, after the name of the scientific city in the Moscow region. The company with 85 employees was acquired from Luxoft for almost $14 million and renamed to IT_One. The new owner was Sergey Matsotskiy. He and Anatoly Karachinsky owned 83% of Luxoft before being sold in 2019.

The AIN.UA editors noted that after 14 months after Luxoft Dubna was sold, for the www.it-one.ru domain, the WHOIS service still showed an entity called Luxoft Dubna, LLC and name servers of Luxoft — ns1.luxoft.com, ns2. luxoft.com, ns3.luxoft.com. It means IT_One was still in a strong connection with Luxoft, which officially was independent, but one day, this connection has gone. This day was February 24, 2022. And this example is not unique.

DXC/Luxoft called the information from Forbes about the non-proper exit of Russia and cooperation with an affiliated company a mistake. This answer was published after the Forbes article. Many companies used to comment on already published materials based on the context.

But all statements of Luxoft and DXC published before don’t answer the essential question. Have there been any agreements between Luxoft and IT_One related to the exit of the Russian market claimed by DXC/Luxoft? The company reps didn’t find time to answer that direct question from the AIN.UA editorial board. We also got no comment on why the it-one.ru’s WHOIS data was changed only on February 24 and why the Luxoft employees went to IT_One together with their work machines.

A specialist of a Ukrainian studio under the Playrix umbrella said, “We are not Wargaming [the developer of World of Tanks, whose decision to leave Minsk was so commented by its employees: ‘The team is now in tranсe; nobody expected that’]”. I am afraid it’s not only about Playrix but all companies whose founders left Russia a long time ago but are still there in their minds.

The editor of AIN.Capital explains how to detect an AirTag if you were bugged.

Short version:

• If you have an iPhone, the system will warn you about someone else’s AirTag near you.
• If you have Android — download the app Detector and select the scan function.

Long version:

What is AirTag?

AirTag is a small tracking device. Once activated, the tracking beacon appears on the map in the Locator app, making it easy to see where one or more AirTags are located, even at a long distance.

AirTag itself can work for a year. It is moisture-resistant and connects in seconds.

Apple creApple created the gadget to protect people from losing their belongings: put one in a bag and always know where it is. But almost immediately, some people started using it for stalking. That is why Apple has developed a system of protection against such actions.

How to detect AirTag?

• If you have an iPhone, the system itself will warn you about the detection of someone else’s AirTag near you and push-notify you. Moreover, if the tracker has been near you for some time, the system will even show the earlier route. For example, you were given a backpack with someone else’s AirTag. You took it and left. As soon as you start moving, your iPhone will send a notification about an AirTag tracking you. You can turn on the sound to detect it.

• If you have an Android, Apple has released a special app Detector, which helps to detect other people’s AirTag near you. For this, there is a special scan button, which will detect nearby trackers.
• If you have an old-school phone — trouble. You need to look through stuff before accepting something from strangers.

Apple assures it is doing its best to make AirTag a device that keeps track of your belongings, not stalking other people. Nevertheless, cases like this happen from time to time. The guide helps find the gadget, but one still has to be careful.

AIN.Capital has collected a list of initiatives and job sites that employers can use to publish their job openings for free to hire Ukrainian specialists.

HelpUkrainians from Jooble

The Ukrainian company Jooble, which is developing a No. 2 job search platform in the world, has created a landing page with job openings for temporarily displaced persons from Ukraine.

The website provides:

• a list of documents required for employment
• tips for employees on how to find jobs safely
• job opportunities for Ukrainians in Poland, Slovakia, Hungary, the Czech Republic, Germany, Moldova, and Romania

UAtalents

UAtalents is an employment platform for Ukrainians who have been UAtalents is an employment platform for Ukrainians who have been forced to leave their homes and go to other cities in Ukraine or abroad. This website has been developed by Ukrainians led by entrepreneur Ivan Kurchatyi. There are already over 300 posts on the site from the project partners.

There are a lot of job propositions in most European countries, including Estonia, Poland, Germany, and others. To add the job listing, tab ‘add a job’ and fill out the form. After that, they will receive applications from talented candidates that fit the position and continue the hiring process.

AdAid.eu

It is an advertising-oriented platform for people who are searching for jobs in the EU or remotely from Ukraine.

The initiative has been developed by the SAR Marketing Communications Association and supported by many agencies in Poland and other countries. The job offers include jobs in marketing communications, both for those who speak several languages ​​and those who speak only Ukrainian.

There are a lot of offers in various fields like strategy, design, media, production, e-commerce, programming, SEM / SEO, event management, PR, and many others.

Contact the initiators to post your openings or learn any details — contact@adaid.eu, or the Ukrainian representatives — the VRK team, pr@vrk.org.ua.

JobsForUkraine

The platform brings together academic, scientific, artistic, professional, and freelance opportunities abroad available to people fleeing war.

In total, the website has collected more than 1,700 vacancies, including from companies such as Skyscanner, Eurowings, Hive. Some employers also offer relocation assistance.

@uajobnow

It is a Telegram chat-bot launched by Ukrainian entrepreneur Artur Orudzhaliiev to help those who lost jobs due to Russian aggression. Here people can find a job, and employers can post offerings in Ukraine, Europe, and the rest of the world for free.

Just subscribe to the bot and contact the administrator to make a publication.

You can also keep providing jobs on job search sites that worked before the war. Some of them are now focusing on job openings in countries that are most often chosen by the refugees.

• matching job platform joberz;
• career portal happymonday.

The list will be updated.

AIN.Capital also reminds you of our verified list of resources that can be used to financially support the Ukrainian Armed Forces, refugees, and citizens affected by the war.

In April, Elon Musk’s SpaceX successfully orbited 60 more Starlink satellites. Their fleet now comprises a total of 420 spacecraft. Elon Musk’s satellites will be used to enhance the global Internet coverage.

The satellites revolve around the Earth along several trajectories and can be observed from various points. This looks quite spectacular: bright dots moving in a line one after another that are clearly visible in the night sky.

To watch them from your location, you can use the Findstarlink website.

To find out when Elon Musk’s satellites will fly over your city or town, select your location (for example, there are four locations for Ukraine: Kyiv, Kharkiv, Odesa, and Lviv). Then the service will display several dates and times when a group of satellites will fly over this territory. Every time, the flight takes several minutes, so you will have time to find them in the sky.

Looking at the results, you might want to note the “Elevation (from horizon)” parameter. The greater the indicator, the higher the group will fly above the horizon. You can also view the flight trajectories of the groups on this website.

The satellite overflight times can also be checked on the Heavens Above website or in the application. To do this, first, specify your location on the map and then select the object you are interested in from the “Satellites” list.

Compared with Findstarlink, this website is a little more complex, but here, you can select your exact location and obtain more detailed data on the brightness of the satellite group, depending on their position above the horizon.

And clicking on the time of passage (highlighted in blue), you can access a star chart with the trajectory: this way, it will be easier to locate the group, navigating by the familiar constellations.

Musk has been repeatedly criticized in that the bright satellite groups (which will only grow in number) obstruct observations of the night sky, particularly in amateur astronomy. That is why the company has stated it would reduce the apparent brightness of the satellites.

Daxx entered the Ukrainian market in December 2007. The company representative says that this decision was logical because Ukraine is one of the most powerful IT hubs in Europe with great growth potential. Today, Daxx has offices in four cities – Kyiv, Kharkiv, Dnipro, and Lviv. AIN.UA learned what the Daxx Kharkiv office looks like and what the company was doing to support and motivate its specialists during the lockdown.

Kharkiv-based Daxx office opened in August 2011. In spring 2019, the office was relocated to 11/13, Teatralnyi Lane. It occupies 2.5 floors, and after the Kyiv office, it is the company’s largest representative office in Ukraine. The company’s specialists are involved in about 35 projects in various fields, including FinTech, AI, education, telecom, medicine, insurance, and software for marketing and business analysis purposes. There are also dedicated teams that work at delivery centers of Daxx.

The office walls are painted in corporate yellow and gray colors. The design was inspired by the California office of Airbnb, excluding open spaces – each one of the company’s specialists works in a separate room.

For relaxation purposes, the office has common areas with armchairs and sofas where one can have a coffee or read a book from a small library. Also, the teams can take a short break to play billiards, table tennis, or PlayStation. There is a sports area equipped with a Swedish wall with dumbbells.

“The intent was to combine a comfortable office atmosphere and a cozy or even homely design to encourage the office employees both to work and to relax during coffee breaks and to spend time together with their coworkers after office hours,” a Daxx representative says.

Daxx operations during lockdown

According to the company’s spokesperson, under the quarantine restrictions, almost all Daxx employees were encouraged to work from home. Only a small number of the company’s staff (up to 10%) still come to the office should due to technical needs or if they wish so. For this purpose, lists of visitors are compiled in advance, and special effort is made to monitor compliance with all recommended safety measures.

Moreover, HR and Account managers are constantly in touch with their teams to assess the impact of remote working on their productivity, mutual cooperation, and overall motivation level and to see where improvements are needed and what kind of support is lacking.

After the lockdown was imposed, Daxx organized the delivery of boxes with fruit, masks, and sanitizers for each team member. The company also held ‘Health Weeks,’ a series of online lectures aimed at improving physical and mental health. Those weeks also included training on myofascial release, workshops on how to provide first aid, and lectures by psychologists on how to deal with anxiety and poor sleep.

Also, a series of workshops on financial literacy, self-management, cooking classes, and CS: GO competitions were conducted. Daxx organizes periodical lectures on mental health issues. The company also has a small community of runners who take part in online races. Anyone who wants can join the morning online yoga class.

How changes affected Daxx teams after the merger with Grid Dynamics

According to Daxx, physical changes affected only Lviv-based teams of Grid Dynamics and Daxx. From now on they will work in the same office. As to the project work, the specialists continue working on their projects, and in addition to Daxx training activities, they can now participate in Grid Dynamics open workshops and webinars.

How did he come up with the idea?

Pryymachenko had been interested in the Chornobyl Nuclear Power Plant disaster since long ago, and he made his first video back in 2013. The very same one (or its surprisingly accurate copy, even featuring the same error) that would later appear in HBO’s Chernobyl miniseries.

Pryymachenko created that video based on the transcript of audio recordings of historical telephone conversations. He continued his study of the Chornobyl disaster, and when Ukraine was under quarantine, he switched to action.

“I had accumulated a large layer of information, books, and documents. During the quarantine, I happened to have a little bit more free time, so I decided to tell the story of the Chornobyl disaster using the tools of motion design,” Andriy says in his commentary to AIN.UA.

For example, trying to find out when and how the world had known about the disaster (while USSR was making every possible effort to conceal it), Andriy came across an archival report by the Swedish Radiation Protection Institute. It describes in detail that on April 28, elevated levels of radiation were detected outside the USSR for the first time, and everything pointed to the accident at one of the Soviet nuclear power plants.

Based on the report, Andriy created this visualization:

The video was published on June 20 and got 4,000 views in 4 days.

How the work proceeds. Stage 1: archives

First of all, the director studies archival records. Western archives and institutes either make them publicly available or grant access for a fee. For the time being, Andriy utilizes those that he can get free of charge.

“If you want certain information, they will provide a clear answer on whether they have these records, and if yes, how much it will cost to access them,” he says.

“There are records I would very much like to use, but I’m not yet ready to invest money in it. After all, there are still plenty of publicly-accessible files left.”

Prices can vary greatly. The director assumes it depends on how rare, or old, the document is. For instance, a copy of a 1986 archival record at a Swedish radio station costs EUR 300.

It is more complicated with Ukrainian archives. Currently, a tremendous amount of work is underway in Ukraine, in an attempt to digitize and publish documents dating back to Soviet times, with the public getting free access to them, as well as simple search tools.

Pryymachenko notes that Ukrainian archivists have made some considerable progress. If you are interested, say, in the Ukrainian Insurgent Army (UPA), you can read the correspondence of Roman Shukhevych (UPA’s military leader) without leaving your home. You can check out documents on the establishment of the Soviet rule in Ukraine. However, as far as non-paper documents are concerned, such as audio recordings, film recordings, there are many problems.

“It is almost impossible to make head or tail of it. For example, there is a paper document saying that certain audio exists. But where it is, who keeps it – nobody can tell for sure,” observes the director.

Stage 2: visualization

Having found an interesting document, the director tries to imagine what visualization technology was available at that period.

“This imposes certain limitations and makes the project very interesting for me as a designer because there were computers back in the ’80s, but their capabilities were quite restricted, as compared to modern ones,” Pryymachenko comments.

“That’s why, on top of searching for archival records, I have to spend time exploring the history of computer and digital technologies of the time.”

For instance, after the Swedes declared it to the world that a nuclear disaster had occurred in the USSR, the US needed to get a confirmation. Right then, the Landsat-5 satellite was flying over the USSR’s territory, and it was first to make a satellite photo of the accident (on April 29).

You can animate a still photo using various modern techniques, but during the ’80s, technologies were very limited. At that time, there existed a technology for the remote picture transmission, SSTV, which converted visual signal into audio, thus transmitting the information, and on the recipient’s side, the audio was converted back to picture.

The video was published on May 5, 2020. It got 53,000 views in six weeks.

Commercial project

Andriy has an individual approach to every video. There is no single template by which he visualizes the unearthed information. Taking into account the archive search and the study of contemporary technologies, each video takes about two weeks of work to be finished.

“The hardest part is to find a balance between artistic and documentary aspects. Each video is based upon some concrete archival file, and I don’t want my artistic visualization to somehow distort it or distract from its crucial points,” says Pryymachenko.

The project is still below the breakeven point. The video has Google AdSense monetization turned on, but this produces just very modest returns: about $1 per 10,000 views. Pryymachenko perceives it rather as a kind of moral support.

Why he does it

The Chornobyl Files project has two objectives. Firstly, this is the way that Pryymachenko wants to spread truthful information on the Chornobyl disaster among young people.

“A whole generation has already grown up playing games about the exclusion zone, inhabited by mutants, with some portals there, etc. I want us to never forget that the Exclusion zone was once someone’s home, where people were born, made friends, lived, loved, and dreamed. This topic shouldn’t be dehumanized,” he says.

The second objective is to show that, even with closed borders, people do not live in isolation from each other. Everything that happens somewhere resounds on the other side of the planet. Now, against the background of the COVID-19 pandemic, it is more visible than ever.

“Hopefully, this project will get people a little bit interested in treating our planet with diligence and prompt them to think globally,” concludes the director.

The video about the last signals from the fourth generation unit of the Chornobyl Nuclear Power Plant was published on May 12, 2020. It received more than 350,000 views in less than 1.5 months.

The Chornobyl Files videos have already got about 3 million views in total. The majority – more than 2 million – is accounted for by that very dreadful call.

The price

When asked by AIN.UA editor how much the company hopes to get from the sale of Menu.ua, Kerobyan did not answer.

According to AIN.UA sources, Menu Group did offer this asset to several potential buyers for $500,000-$700,000. However, so far, no agreements have been reached with any of them.

Previously, in an interview with Retailers, Kerobyan said that Menu Group was negotiating the sale of Menu.ua with 3-4 Ukrainian companies, including a large chain of supermarkets.

However, according to sources of AIN.UA, the company will hardly have time to sell the service before June 8, as none of the potential buyers has shown any interest in the acquisition of the above asset. Therefore, the option of closing the business is more probable.

According to one of the sources in the market, the price of half a million dollars is unreasonably high. “There’s no point in buying the database and the application. The first one can be obtained through aggressive marketing, while the second one can be developed in 1-2 months,” said the source of AIN.UA. He also says that Fozzy Group (Silpo) should not be considered as a potential buyer since the company has its own quite successful delivery.

What are the achievements of the service

The service has been operating in Ukraine for just under a year. According to its owners’ estimates, Menu.ua has covered 1% of the market.

During that time, Menu.ua has attracted 200 partners in Kyiv and Dnipro, including KFC, a fast-food restaurant chain. However, some of them broke up the cooperation, as Menu.ua has not made payments on orders for several months. The total amount of debt is $220,000.

Menu.ua has its application and aggregator Eda.ua, which works in 25 cities in Ukraine. The total number of employees is about 50 people. Now the fate of the Ukrainian team looks vague.

“We hope that most people will keep their jobs if the company is successfully sold. Otherwise, to our great regret, they will have to search for a new job,” said Vahan Kerobyan, the founder and CEO of Menu Group.

Why didn’t Menu.ua succeed?

Menu Group is developing a similar service in Armenia and Belarus. Moreover, according to Karobyan, there was a significant growth during the quarantine period – by 50% in February and March. But Ukraine has remained unprofitable all the time. The founder blames not the competitors – Glovo, Uber Eats (closed on June 3), or Raketa – but the lack of funds.

“Our business is very capital intensive. To succeed, we need big investments, even in the non-competitive market.

We could not ensure the required investments for our Ukrainian subsidiary. And after the beginning of the pandemic, it became clear that we will not be able to attract investments quickly,” he explained to AIN.UA.”

The company planned to attract $15 million of investments before the quarantine and invest most of them in the development of the Ukrainian market. However, the deal did not take place due to the crisis.

Besides the Ukrainian service, Menu Group also closes the food delivery service in Georgia. There are curfew restrictions in the country due to the pandemic, and the restaurants cannot work for delivery there. In the future, the company intends to focus on markets where its services are profitable, thus getting rid of reliance on external investments.

The whole world is buzzing about the successful launch of the Falcon Heavy, super heavy-lift launch vehicle, which the company of Elon Musk carried out on February 6. That was, without exaggeration, a historical event. All the people involved in it became heroes. One of them is Ukrainian Oleksii Pakhunov, who played an important role in the space adventures of SpaceX. He was responsible for the successful landing of the Falcon 9 in 2015, and on February 6, he sat in the front row at Mission Control.

Relocation and career

Oleksii Pakhunov was born in Zhytomyr. He graduated from Khmelnytskyi Technological University of Podillya (now Khmelnytskyi National University) with a degree in Computer Systems and Networks.

In 2004, he moved to Denmark to work at Microsoft in Copenhagen. Before that, he had also lived and worked in Romania. In 2006, he joined the Windows Kernel team and moved to Redmond, Washington. Then he worked for one of the Microsoft Research teams. And in 2012, he joined Google, where he worked on Chrome Remote Desktop.

Oleksii left Ukraine in the early 2000s, and today he avoids talking about politics, trying to avoid near-political topics as much as possible.”Mainly because of the extremely low efficiency of such disputes, and especially considering the events of recent years,” he emphasizes.

Transfer to SpaceX and Elon Musk

In mid-2013, a SpaceX recruiter contacted Oleksii and made him an offer that the Ukrainian found difficult to refuse, “I could combine my two favorite hobbies: programming and space,” recalls Pakhunov. Today he works as a senior software developer in the Flight Software group, SpaceX. 

By that time, the company was already too large and Oleksii did not have an interview with Elon Musk. He met with the founder and CEO of the company personally only a few times. “First time it was during the company’s gathering in a restaurant, and the second time – in a rather stressful setting when you had to quickly make a difficult decision. I liked the gathering in the restaurant more,” Oleksii admits.

“Elon is well versed in engineering; he has a keen scent for working solutions to complex engineering problems. Moreover, he is good at solving engineering problems through business methods. Say you run into a problem with your main application processing data too slowly. A naive engineering approach to solving this problem is to spend X hours on code optimization. A slightly less naive approach is to buy ten times more servers. This, probably, is not very efficient, but it can be justified since we are talking about the main function of the company. Musk in this situation may say that, in general, data processing optimization is absolutely not the problem that needs to be addressed. You just need to reduce the flow of incoming data and move on. This will not only solve the original problem but also help in a dozen other areas where a large amount of data was creating issues. It only remains to find a way to reduce the amount of incoming data…

It seems to me that this “conceptual” thinking is both the reason why Musk succeeds and the reason why the deadlines are constantly crawling to the right.”

Working on software for Falcon

Oleksii Falcon Software’s team consists of about ten people. They write code for rockets and ground infrastructure. C++ and Linux are used in flight and flight support systems. Python and other programming languages are widely used in less critical systems.

According to Oleksii, software for Falcon differs from any other code by high requirements for reliability and predictability of behavior. “If Word or browser page can crash with minimal consequences, on the rocket, it can cause many millions of casualties. It affects the design, the way data is processed, and the way code is written,” Pakhunov explained. Absolute code efficiency is less important than stable running time. Simple code is welcomed – it is easier to check and test it.

The schedule of SpaceX engineers is hard, though it seems Pakhunov likes it. “There is time for the rest and personal life, but if you ask my wife, she won’t agree with me. It’s easy to work around the clock at SpaceX,” he says. The company tries to organize the workflow in such a way as to reduce overtime work to a minimum, but can’t eliminate it.

The launch time depends on the orbit, not on the work schedule. Prelaunch preparation is counted from launch time. I’d say I work 45-50 hours a week.

Employment at SpaceX

Due to the fact that SpaceX is subject to ITAR regulations (the International Traffic in Arms Regulations, inter alia, the access of foreigners to potentially military technologies), only U.S. citizens or permanent residents (lucky green card holders) can become employees of the company. There is also an option to get the so-called export license.

SpaceX has both purely programming positions and positions for physics programmers. The former write code, the latter develop control and navigation algorithms. If we talk about the first, then the company looks primarily at the ability of a specialist to write a reliable C++ code with an understanding of how a computer works at different levels, and the ability to apply this knowledge to solve practical tasks.

One of my favorite interview questions sounds like this: “Tell us in as much detail as possible what happens from the moment the network card receives the packet with the last piece of the HTML page until the browser redraws the image on the screen. This question allows you to talk about interaction with hardware, the process scheduler, network protocols, memory management, event processing, isolating applications from each other, JIT compilation, the graphics subsystem, etc.”

According to Pakhunov, SpaceX is not looking for any special “aerospace programmers.” Game experience, system developers, developers of embedded / server applications often have suitable work experience (in C++, closer to hardware).

Concerning taxable foreign assets, the law comes into force on January 1, 2021, so there is still time to prepare.

AIN.UA’s editor has asked lawyers, entrepreneurs, and investors about what is going to change for the venture capital investment industry.

Why does Ukraine need the CFC law?

According to the lawyer Yuriy Kornaga, a partner at Axon Partners, the CFC regulations have not come as a surprise for Ukrainians. The introduction of CFC rules in Ukraine was anticipated back in 2017. At that time, Ukraine committed to adopting the package of the Base Erosion and Profit Shifting (BEPS) Action Plan in 15 actions.

The idea behind CFC rules is to tackle tax migration. Any business in any jurisdiction should get a tax rate that is commensurate with its “home” rate. If it relies on low-tax jurisdictions, let it relocate physically, rather than make a virtual escape.

What is a CFC?

A controlled foreign company is any legal entity registered abroad and controlled by a controller (see below). For a CFC, it is possible to have no legal entity status; these can be partnerships, trusts (except for blind ones), funds. Even a joint venture agreement without creating a legal entity can fall under the definition of a CFC.

“It doesn’t matter if a CFC is registered offshore or in a regular jurisdiction, in the U.S. or Estonia, if it is a product company or an outsourcing company, it is still a CFC,” the legal expert comments.

Who is a controller?

A controller is a Ukrainian resident (an individual permanently residing in the country or a legal entity registered here) that owns directly or indirectly:

• a share in a CFC which is more than 50%, or
• a share in a CFC which is more than 10%, provided that several controllers own shares in the CFC making more than 50% in total (this applies to situations where shares in a company are held by several friends or relatives; if there are several controllers, they are residents, and their joint share exceeds 50%, the provisions of the law do apply), or
• independently or together with other related Ukrainian residents perform effective control over the CFC (meaning that a person, or a legal entity, can order the CFC, for example, to make a payment or conclude an agreement; can hold negotiations over the CFC’s deals; make transactions with the CFC’s banking accounts or freeze them, etc.).

“Holders of options for less than 10% or similar exit bonuses are not controllers. If, though, the amount of the option or bonus is more, the resident becomes a controller not since, for example, the signing of the option agreement, but when he or she buys the option in full or proportionally, or secures the rights for the exit bonus,” says the lawyer.

What must controllers do now?

They have to report about having a CFC to the tax office. And pay taxes on their profits. The reporting period is one year.

Controllers should file such a report at the same time as their annual income statement (the deadline for individuals is April 30, 2021) or their income tax return (the deadline for legal entities controller is March 1, 2021).

What taxes do controllers pay?

The tax is levied on the part of the CFC’s adjusted income for the period under review, which is proportionate to the controller’s share. It should be calculated by the controllers themselves, based on the CFC’s financial statement.

It is important to remember that if the total income from all the controller’s CFCs, according to their financial records, does not exceed EUR 5 million, no such tax is payable.

Individuals pay the personal income tax, and legal entities, corporate income tax.

For instance, there is a CFC in the form of an outsourcing or product company registered in Cyprus. Its controller controls a 60% share. The company has received an annual revenue of $2 million, the profit is $1 million. The adjusted profit is the profit minus the tax of 12.5% (CIT) payed in Cyprus. The tax base for the controller should be $525,000 (60% of $1 million minus 12.5% of this sum). The controller must pay the personal income tax of 18% and the military levy of 1.5% on it.

Those who are not filing reports and not paying taxes will be fined. For example, a non-filed report will cost UAH 210,200 (about $7,800), failing to report the acquisition of a share in a CFC, UAH 630,600 (about $24,500) for each case.

Showing what has changed by examples

The full analysis of the changes has been provided to AIN.UA by Sayenko Kharenko’s Tax Practitioner Svitlana Musiyenko and Senior Lawyer Kateryna Utiralova.

Situation 1. A Ukrainian beneficiary owns a foreign company and has an account in a foreign bank. From January 1, 2021, the taxation of controlled foreign companies (CFCs) is introduced. This means:

Before:

• The Ukrainian beneficiary owns the foreign company and has an account in a foreign bank, all while:
  • he or she spends money from the account on personal needs, paying for travel, clothes, medical treatment; he or she uses the company as a “piggy bank”: to store currency safely and anonymously, to “secretly” own real estate in Ukraine and all over the world;
  • in Ukraine, no one knows about the company, because the registers of shareholders and beneficiaries are closed, and even if they are open, the use of nominals is common;
  • in Ukraine, no one knows about the bank account because of bank secrecy, no one sees the transaction history, no one knows the balance.

Now:

• The Ukrainian beneficiary still owns the foreign company and has an account in a foreign bank, but:
  • the foreign company is known in Ukraine, because:
    • the information is disclosed by the individual in his or her report, otherwise, there is a fine;
    • the tax office is interested in discovering the CFC because the failure to file the report means a fine and additional payments to the state authorities;
    • financial institutions in Ukraine invariably provide the data on beneficiaries to the tax authorities.
  • Soon (since 2021–2022), the CRS international data exchange will start working, and the tax office will be receiving information about accounts set up by Ukrainian residents in other countries. The tax office will see the account balance and where the money has gone; the authority will see where you have got any foreign companies.

What about paying taxes in this situation?

Before:

The beneficiary does not pay taxes anywhere.

At the level of the foreign company, there is no tax because it is offshore, and if not, then the tax is minimal, according to the local rules. At the level of the Ukrainian company or the Ukrainian beneficiary, the tax is not paid because there is no legal obligation to do it, and Ukraine does not know that there is money for paying it.

Now:

• The Ukrainian beneficiary files a report concerning the foreign company to the tax office and calculates the taxation amount to pay in Ukraine.
• He or she pays the income tax (according to his or her share in the profit of the foreign company) at a rate of 19.5% (the income tax of 18% + the military levy of 1.5%). There are exceptions, where you do not have to pay the tax, but you must file the report to the tax office anyway.

Situation 2. A Ukrainian company conducts a transaction with a foreign company.

Before:

The transaction expenses are recorded according to the accounting regulations in Ukraine.

Now:

There is a concept of a “business goal” for the transaction.

If the tax office can prove the absence of a “business goal,” it will have the right to disregard the transaction amount when calculating the Ukrainian company’s taxable income.

What exactly must the tax office prove?

That the transaction’s principal goal is tax evasion, or that, under the same circumstances, another Ukrainian company would not be ready to conduct similar transactions with an unrelated company.

Situation 3. A Ukrainian company pays dividends, interest, or royalties to a foreign company, theoretically speaking, from Cyprus (from a jurisdiction covered by the Convention for the Avoidance of Double Taxation).

Before:

The reduced tax rates under the Convention are always applied.

Now:

There is the “principal goal” test. If the Ukrainian company makes a payment with the purpose of receiving a reduction, the Convention will not be applied.

Additionally, it was defined more accurately what a beneficiary owner of income on payments is: an individual who is a “beneficiary party” and has the right to “effectively dispose of the income.”

If the receiving foreign company is not a beneficiary owner, the reduction under the Convention will not apply.

Situation 4. A Ukrainian individual sells a foreign asset to a non-resident which is a related party or a company from a low-tax jurisdiction.

Before:

There are no restrictions on the amount of income that the Ukrainian party should get from the acquisition of the asset.

Now:

The Ukrainian party must calculate its taxable income as being not below the level of the “arm’s length price.” In effect, this is about the market price. If the party buys a foreign asset, then the expenses must also be not above the “arm’s length prices.”

Situation 5. A Ukrainian company enters into transactions with a related foreign company, and such transactions are subject to transfer pricing control in Ukraine.

Before:

The Ukrainian company pays standard taxes. In case it turns out that, according to the transfer pricing regulations, the company’s prices are inconsistent with the “arm’s length principle”, the company will pay additional income taxes.

Now:

From January 1, 2021 (if the date is not postponed), the concept of a constructive dividend is introduced.

Equated with such dividends is the difference between the actual transaction price and the price calculated according to the “arm’s length principle,” under the transfer pricing regulations.

This means that in case it turns out that, under the transfer pricing regulations, the company’s prices are inconsistent with the “arm’s length principle,” the company will not only pay extra income tax but the withholding tax as well. That is the withholding tax at the rate of 15% (or at a reduced rate, if applicable under the convention) on the constructive dividend amount.

What do investors and entrepreneurs think of it?

Many investors and entrepreneurs explicitly say and write that the new law will cause a wave of relocations from the country.

Denys Dovhopoliy, founder of GrowthUP Group, Unicorn Nest:

There is nothing bad about the new law. The bad thing is that it was signed about five years earlier than it should be. We need to put the economy in order, to grow the cow before we start milking it. The logic is very strange here. All those in power now will be severely affected by this law.

And, well, yeah, the already strong emigration sentiment is going to get another strong push now. And those pushed will be the people creating the economy now. And I don’t mean just the IT guys :); the citizenship and residency of this country have been devalued to almost zero for the entrepreneurially active segment of the population.

The nominals will raise prices for Ukrainians. If you know what I mean.

Igor Pertsya, a partner at TA Ventures:

This is more of an ideology issue for me. There was an unstated social pact between the state and the entrepreneurs: we leave you alone, taking a small-percentage tax, you stay here without complaining about the absence of good roads, decent healthcare, etc. Now it has all been downplayed. When owning a foreign company, Ukrainian entrepreneurs will consider obtaining foreign citizenship or residency.

For us as a fund, nothing has changed. We can have 5% in a startup, but the person who founded business can have a 100% share. So, many founders of Ukrainian projects come within the provisions of this law. This means that many startuppers who have lived in Ukraine will say, “Oh, what the hell!” and then just pack and move.

Andriy Kryvorchuk, founder of investment company Adventures Lab: 

We still don’t fully understand what the final version of the law will be. 

Do we have to pay taxes? Definitely, yes. But let’s find out why most of the Ukrainian business (especially product companies) does not accumulate their income in Ukraine: 

1. Keeping money in Ukraine is a risk (tomorrow, the bank will collapse, or raiders will come) 
2. Keeping an intellectual property in Ukraine is a risk (tomorrow, the Pechersk Court will decide that your work belongs to someone else).

And this is just the tip of an iceberg. I dream of the day when Ukrainian entrepreneurs will choose Ukraine as their main jurisdiction. And they’ll refuse other options. But today, the Ukrainian jurisdiction is one of the least protected, clear, and simple.

Our lawmakers obviously don’t understand that: 

1. Today, the world is at its most violent war between jurisdictions for every dollar of business.
2. Businesses will incorporate companies and pay taxes where they feel safe.
3. In a global world, you can’t tie anyone to you anymore.

Therefore, without improving the jurisdiction (British law, ease of doing business, the safety of funds, etc.), nothing will change. And there will be no more money in the treasury not from this law, or dozens of others.

Dmitri Lisitski, co-founder of Influ2: 

The law has taken a toll on the prospects of Ukrainian startups. Similar laws exist in other countries, but they are targeted at owners of large businesses hiding their assets in offshore jurisdictions. As usual, our lawmakers got everything mixed up! As a result, every Ukrainian startup must now file a tax return on its ownership of a mythical business. 

I do not doubt that the fact of reporting ownership of a foreign company makes technological entrepreneurs vulnerable in the realities of Ukraine. So, dear startupers, wait for fines, there is no doubt that the tax authorities will try to milk “rich tech specialists.”

The only sensible solution is to change your tax residency. In other words, when launching a startup, you have to plan the relocation without delay, which has many advantages. Together with the relocation, the entrepreneur gets access to funds, integration into the ecosystem, access to markets, so this is the final argument not to try to do business from Ukraine.

Alternate opinion: not everything is so terrible

If we want to move toward Europe, we need to practice paying taxes, says Lyubomyr Ostapiv, financial consultant, and partner at iPlan.ua. In his opinion, the law has some good sense:  

“When I started the first American company for IT business in 2013, I found out about FBAR. Simply said, you will pay a $10,000 fine if you did not file a separate report on the foreign account of an American resident. And, by the way, the Internal Revenue Service has the right to write off the money from the bank account if you owe it. I am sure that the CFC owners will figure out how to file reports and pay 19.5% of the profit. Of course, there may be excesses with the State Fiscal Service of Ukraine, and this is the biggest risk factor. For those who want to live in this country, it is important to “teach” the State Fiscal Service to interact with taxpayers within the law.”

According to Vlad Yarovoi, founder of RIKK, the law is not as bad as everyone says, “Even if your company is a CFC, most likely nothing will change for you, except the need to notify the tax authority and submit reports.”

The lawyer notes that there is no risk for business owners if:

• The total income from all CFCs does not exceed 2 million euros. Startupers and all small/medium businesses breathe a sigh of relief, says the lawyer.
• If the company is public and traded on the exchange.
• If there is an Avoidance of Double Taxation Agreement between Ukraine and the country where the company is incorporated and:
  • or the entrepreneur pays at least 13% tax (Bulgaria, Hungary, Cyprus, and Estonia – not applicable);
  • part of the passive income of the company is not more than 50%.

“The last point also applies to large businesses that are active. The only fly in the ointment is that the company must have real opportunities to perform all operations (personnel, capital, office). So, we have to create a certain substance,” says the lawyer.

The company uploaded the project code to GitHub and described its creation process and technologies. According to the backend developer Serhii Kalachnikov, who worked on the project, the idea was to check whether it is possible to detect faces without masks only through web cameras. It is a non-commercial project. According to the developer, the team was motivated by curiosity.

It took the team two weeks to train the neural network. The process of its creation was described in the blog by the developers. Briefly, it looked in the following way:

• In the final version of the neural network, the team used TensorFlow 2 Nightly, OpenCV 2, Keras, Yolov3. OpenCV – for processing images and creating ‘squares’ when detecting masks. Yolov3 is the ‘brain’ of the neural network.
• The team started with a simple task: to train the network to find masks in images, and then to move to video processing. Two applications were created in the process. The first one was written in Node.JS and is used to create labels. It helps to compose datasets and transform coordinates of objects in the image from Labelbox JSON to XML Yolov3-format.

• First, it was necessary to identify the precise location of the mask (or any other object). For this purpose, the team used the Labelbox website. It is convenient because it generates a file with the necessary settings: mask location, image dimensions, time spent on the image, etc. These files later get into one of the mentioned programs.

• The team wrote a code for Labelbox that parses all the data. This data is later spread between other files in the view required for the neural network to work with it. The program also creates anchors based on this data. The anchors are used to define the height and width of the mask, and how to scale it. The result is a final dataset with images and annotations.
• The second app is written in Python. It includes Yolov3 and trains the neural network. With this application, developers have created their own model of object recognition in the image.

• The maximum size for the recognized piece of the image was set to 288 px. This number may be larger, but it was chosen small for faster processing.
• num.epoch stands for the number of steps for training. It took the team 12 hours to complete 30 steps (with an image size of 288 px).

• The developers had to write a separate script for the video. However, it worked on the same principles that were used to analyze images. It’s based on Yolov3. The team also set up openCV for uploading video and searching for frames at a certain fps. The app works in the following way: you need to upload a video file to a certain folder and it starts processing the video frame by frame.
• Webcams usually record short videos for 10-15 minutes. These videos could be sent to a server where they will be processed by similar software. This could be useful if the company or organization, for example, wants to make sure that all its employees wear masks.

You can see the results of the neural network work on the following video:

AIN.UA talks about the investigation of Dagens Nyheter and shares new details of a multi-million-dollar scam.

Getting people’s attention

• Milton Group published a fake advertisement on social networks. On it, Hugh Jackman, Gordon Ramsay, and other celebrities advertised investments in bitcoin, precious metals, and other assets.
• Those who swallowed the bait were “processed” by call center operators. The call center is located in the Mandarin Plaza business center in the very center of Kyiv.
• The victims were promised high profits without serious risks. Journalists describe several frauds involving elderly Swedes – this audience was considered one of the most profitable.
• Operators cozied up to the victims by following the instructions: at first, they showed interest in people’s lives, and gradually switched to the point. They would create client files with status and key events.

How to diddle people out of tens of thousands: details of the Milton Group’s scheme

• The first tranche – one thousand Swedish kronor (about $100). Then they would install remote access software (AnyDesk or TeamViewer) on computers and an extension for embedding code on pages. As a result, the appearance of realistic transactions was created.
• Victims thought their assets were growing by leaps and bounds, while operators took short-term loans in their names at rates up to 39%. People could not cash out their income.
• Just as the situation was becoming critical, the second category of scammers came into play. These were the “saviors” – they would report that the missing funds were found. To receive them, you only had to pay a commission and tax. Sending money did not change the situation.
• Dagens Nyheter provides several eloquent illustrations. Thus, a 67-year-old Swede named Mai-Britt sold the house. A 73-year-old retired ambulance driver Kent Lundin has invested tens of thousands of dollars.
• A man from the Czech Republic suffered a record loss of about $200,000. A Swedish citizen of Iranian descent paid approximately the same amount.
• Many clients were “processed” by a man named William Bradley. In fact, it was an Iranian Javid Hamze. He even boasted that he had obtained about $150,000 from one of the victims. People filed complaints against him and the Milton Group with the Swedish police, but local law enforcement officials were in no hurry to investigate.

• In total, according to The Guardian, we are talking about citizens of 50 countries. The operators were divided into segments by language: Russian, Spanish, English, Italian. However, the scammers tried to avoid the Americans, so as not to attract the attention of the FBI.

Scale of the Milton Group project

• Dagens Nyheter collected their data thanks to the many months of work of their own source within the Milton Group. The source took pictures of the workflows of the company, employees, and collected data.
• In total, the Milton Group employed about 200 people. To avoid data leaks, employees were forced to leave phones at the entrance to the office. And to motivate the employees for the fulfillment of plans the company paid bonuses.
• The income of managers who made a large number of calls was based on commissions. Credit card transactions yielded 4%, transactions through transfer services like Western Union or Moneygram – 6%, transactions through cryptocurrencies – 9%.
• As the editors of AIN.UA managed to find out, bank payments were accepted through the British operator Clear Junction Ltd. Earlier, AIN.UA already wrote about it – this company registered its payment system in Ukraine, it also presented euro accounts for Monobank. It is owned by Dmitry Katz, who also has business in Ukraine.
• Mass media allege that the turnover of Milton Group with all its brands in 2019 alone amounted to $70 million. The organizers talked about $50 million and $65 million at different times.
• Milton Group CEO Yacob Keselman called the description of their work as “incorrect” and said that the company provides IT support services

• Journalists from OCCRP write that the Milton Group has connections with call centers in Albania, Georgia, and Northern Macedonia. AIN.UA journalist managed to find a resume of a former Milton Group employee who notes “opening an office in another city” but does not disclose the location.

Milton Group. On paper and in reality

The journalist of AIN.UA further investigated the business of Milton Group and its affiliates. The key positions are occupied by Georgian nationals who do business in Ukraine. Some of them are former Georgian officials, and some have already been accused of illegal activities.

• There is not much data on the Milton Group in Ukrainian registries. Milton Group LLC was founded in 2016, its specialization is computer programming. The authorized capital of the enterprise is UAH 2.6 million, and the revenue in 2018 supposedly did not exceed 4 million. The only official beneficiary of the Milton Group is Georgian national Irakli Dadivadze.
• In the journalistic investigation, the employees say that the real owner is another person, Georgian-born Israeli citizen, David Todua. He is associated with the forces of the United National Movement party of Mikheil Saakashvili.
• Todua owns the Cyprus payment company Naspay, through which most of the funds passed.
• In Ukraine, Dadivadze and Todua have an extensive network of companies.
• The second major business registered in the name of Dadivadze is Lime Consulting. It also presents itself as an IT project, but indirect signs suggest that it could operate in the online casino niche.

• Lime Consulting has an office in Arena City, as well as active recruiting activities, where newcomers with no experience are promised to get an income of $2,000 – $3,000 within the first 4 months.
• Sales managers prevail among the available openings of the company; there is language segmentation (such as Swedish, Polish, German). Responsibilities: telephone, ability to retain a regular customer, and no specifics for the product.

• Former Milton Group employees openly write that the company is selling binary options and other fake assets. They also describe other facets of the work: they were forced to work while standing and provide their life histories during employment.
• Several users mention that in May 2018, law enforcement officers visited the Milton Group’s office with a search. They allegedly seized computers and documents and also informed them about the initiation of criminal proceedings. But in the court register, there is no mention of this search – as well as of the Milton Group legal entity in general.
• David Todua has several businesses in Ukraine, established in partnership with the former Minister of Defense and Director of the Georgian Financial Police, David Kezerashvili. In 2013, he was accused of bribery and smuggling of alcohol to Ukraine.
• Through the joint Project Partners LLC – which is also engaged in IT programming – Kodua and Kazerashvili own the Firma Spets-trading Company and a share in Elitkomfortbud.
• Former Georgian officials have been appointed directors and authorized persons. So, the head of the Firma Spets-trading Company Gia Getsadze is a former deputy minister of justice of Georgia (she held the same position in Ukraine). And the co-founder of Elitkomfortbud is Petr Tsiskarishvili, the Minister of Agriculture of Georgia in the Saakashvili government, writes “Slidstvo.Info”. However, no real ties between these enterprises and the business of Milton Group have been found.

The ICO should have increased this number 40-fold by 2022 – to a phenomenal 120 million (for comparison, Netflix has 167 million paying subscribers). It was expected that Divan.TV 2.0 on the blockchain would start working from the end of 2019. The year 2020 came, and the ICO didn’t happen. Moreover, nobody has talked about it for almost a year now.

AIN.UA journalist could not confirm Divan.TV’s performance indicators in conversations with current and former content providers. The company did not respond to AIN.UA requests. Andrey Kolodyuk, the founder of the project, also did not respond to AIN.UA’s requests repeatedly sent to him via email and social media.

But what we managed to find out was multimillion lawsuits and debt to Fox. Before the acquisition of Fox by Disney in 2019, the company belonged to American billionaire Rupert Murdoch.

AIN.UA journalist traced the chronology of how the debts were “reregistered” to a saleswoman from Obukhiv [Editor’s note: a small town in Ukraine], as well as analyzed the unclear business performance indicators of the service in the media and presentations for investors.

Welcome to Ukraine, Rupert Murdoch

In 2015, the representative office of the U.S. media giant Fox (Swiss Fox International Channels Luxembourg) sued Divan.TV. The Ukrainian service did not pay for the content. It accumulated a debt of ₴1.5 million. In 2017, RBC Ukraine already described the status of this case.

In September 2016, the Economic Court of Kyiv resolved that Divan.TV (represented by LLC Divan.TV) should pay Fox $57,400 for broadcasts from January to September 2014. Kyiv Commercial Court of Appeal finally rejected the appeal of the defendant on November 22, 2016.

Later, the press service of Divan.TV admitted that the company had a debt and repayment plans. But the plans remained just plans. Divan.TV complained about Fox’s unwillingness to reach a compromise:

All channels, except Fox, have renegotiated their contracts with us on new terms. The owner of Fox, represented by Rodion Pryntsevsky, General Manager of Fox Networks Group in Northeast Europe, refused to come to mutually beneficial agreements, putting us in non-competitive conditions. <…>

But when they [Editor’s note: Fox] began to issue invoices even after our official request, we refused to repay the debt.

Representatives of Divan.TV informed RBC-Ukraine that they have never repaid the debt.

That was the end of a previously known part of the story.

Mug’s game: two Divan.TV

An unknown part of the story began almost simultaneously with the end of the trial. Divan.TV just got rid of a legal entity with debts. A step-by-step chronology of this scheme is given below.

In March 2016, six months before the court ruled in favor of Fox, Arkadii Kaniuka became the director of Divan.TV. He has been the CEO of the service since 2015, and now he is also the director of the legal entity.

In November 2016, a week before the appeal was denied, Divan.TV LLC changed its name. The company began to be called Multimedia Group Ukraine LLC, and Lubov Polishchuk became one of its representatives in court by Power of Attorney.

Four months later, in March 2017, Lubov Polishchuk replaced Arkadii Kaniuka as the director of Multimedia Group Ukraine LLC. And three months later, in June 2017, Polishchuk became the full owner of this legal entity.

Since 2012 the owner of Divan.TV LLC was a Cyprus company Mikarnial Ltd, whose key beneficiary and controller is Andrey Kolodyuk. However, at the same time, when Polishchuk took up the position, Mikarnial Ltd, and therefore the entrepreneur himself, left the ownership of Multimedia Group Ukraine LLC. Divan.TV did not comment on such reshuffles neither then, nor now.

Journalist of AIN.UA could not contact Lubov Polishchuk. However, according to YouControl, she (or her full namesake with an identical address) is listed as a manager in 22 other companies. It was also impossible to contact other representatives of Multimedia Group Ukraine LLC, the contact details of the company from the registries are invalid. And this is not an accident.

Lubov Polishchuk is not a serial entrepreneur but a saleswoman from Obukhiv, as journalists of Bihus.info found out. She sold her passport data, which was used by dozens of legal entities. Among those fictional companies are, for example, an Opposition Bloc party donor and a company that has been involved in corruption scandals.

All this time, the Divan.TV service hasn’t stopped working. However, instead of Multimedia Group Ukraine LLC (formerly called Divan.TV) it has a new legal entity – Finart Capital Invest LLC. Previously, this company was owned by Kaniuka and engaged in financial services, and, since March 2017, the notorious Mikartial Ltd became the owner of the company. The transfer took place simultaneously with the appearance of Lubov Polishchuk in the former Divan.TV LLC.

Finart Capital Invest LLC is the recipient of funds for the service Divan.TV, it is also listed on the website of Datagroup as a provider of Divan.TV service. At the same time, according to the service offer, now all services are provided by Mikarnial Ltd. This company also owns trademarks of Divan.TV, and publishes service applications for Android and iOS.

Co-owners of Mikarnial Ltd, which is still behind Divan.TV, as of the beginning of 2020 are already well-known Andrey Kolodyuk, Denis Lukash, and Arkadii Kaniuka. Ownership is carried out through a number of legal entities: Meresta Investment Limited, Medoliv Trade Inc., For-com LLC, etc. Denis and Arkadii are minority shareholders – they have 6% and 1% of the shares, respectively.

It is noteworthy that the founder of Mikarnial Ltd was Sykon Holdings Ltd, which performed secretarial functions (registered and transferred legal entities to others) for more than 100 companies. It appeared in the corruption schemes of the former Minister of Energy Eduard Stavitsky and a number of other scandals.

After the Ukrainian court sided with Fox in November 2016, the enforcement service gained access to Divan.TV / Multimedia Group Ukraine legal entities accounts. No money was found there, the debt could not be written off – this is confirmed by the fact that the case is still open on the website of the enforcement service, as well as according to sources familiar with the situation.

Audio recording

In Divan.TV, the change of ownership of Divan.TV LLC that lost the litigation to Fox, was never explained publicly. It was only reported that the new team has no control over the former legal entity.

The sale raises questions: if this is a real deal, then what did the buyer in the person of Polishchuk get except for the legal entity that lost the court? The service began accepting money through a new company, and Mikarnial LTD retained all trademarks. There is no official answer, but AIN.UA got an audio recording that sheds light on some previously unknown things.

On the recording, people who introduced themselves as Divan.TV employees – CEO Arkadii Kaniuka and Content Procurement Director Elena Kohanets – talk to a person who introduced himself as Rodion [Pryntsevsky, Fox Regional Manager in Ukraine]. The subject of the conversation, which can be dated to the end of 2017, is the payment of Divan.TV’s debts to Fox and the resumption of cooperation.

E.K .: – In fact, the legal entity that signed the contract – LLC Divan.TV is no longer under our control. We have no power over it. This lawsuit forced us… We had huge financial problems and we would not have survived it. We had to sell our software solution along with debts in full. Divan.TV service and legal entity are two different things.

When asked whether evasion of paying debts was a lie, people who introduced themselves as top managers of the service answered in the affirmative:

E.K .: – Back then it was the only way to postpone the issue until the moment when it would really be handled.

R.P.: – So you lied to us?

E.K .: – Well, probably. Although in business it is called differently. But in fact, Andrey Viktorovich left the service for his personal reasons, unknown to anyone. And he said: “Try to decide as you see fit.”

As a result of this conversation, people who called themselves representatives of Divan.TV in 2017 wanted to sign a new cooperation agreement with Fox. They offered to pay the debts through the Cypriot offshore Micarnial Ltd, and only after Fox resumed the streaming. The man who called himself the Fox representative responded with a willingness to turn on the streaming, but only after the debts are paid. There is no Fox content on Divan.TV today.

Ctrl + C, Ctrl + V – “Continent TV”

The same story was publicly told by Continent TV CEO Dmitry Tatsiy. This is another provider who won a lawsuit against Divan.TV for pirate streaming:

• In May 2016, Continent TV was in talks with Divan.TV regarding the distribution of the Trophy, Trophy HD channels. The contract was not concluded, but Divan.TV still streamed channels from May 1 to September 30, 2016. The service denies it.
• In October 2018, Continent TV LLC went to court, asking LLC Multimedia Group Ukraine, known to us as ex-Divan.TV, to pay UAH 169,650. The Commercial Court of Kyiv refused to satisfy their requirements.
• The court of appeal upheld the claim but reduced the amount of compensation to UAH 96,050. They had to be written off from Multimedia Group Ukraine LLC (the successor to Divan.TV LLC).

But is there anything to take from a debtor who has been transferred into the ownership of a saleswoman from Obukhiv? According to the YouControl analytical system, as early as April 2018, the Multimedia Group Ukraine had their VAT certificate canceled – the company did not file a declaration within a year. It also has incurred a tax debt in the amount of UAH 5,665 and has had no revenues since 2016.

When Continent TV won the litigation, its CEO Dmitry Tatsiy publicly accused Divan.TV of changing legal entities. His words in Detector.Media repeat the Fox scheme described above:

Previously, the company provided service as LLC Divan.TV, then this legal entity was renamed to Multimedia Group Ukraine LLC, and in the future, it was changed to another legal entity Finart Capital Invest LLC. Such active actions to change legal entities, together with high-profile litigation, testify to the company’s intentions to avoid financial responsibility for lost court cases.

In response, Arkadii Kaniuka said only that Multimedia Group Ukraine LLC is not related to Divan.TV brand.

There were others

In general, Divan.TV almost from the very beginning had problems with copyright holders. Even at the dawn of its existence, the largest Ukrainian media groups were suing the company for illegal broadcasting of “1+1”, “2+2”, STB, “New Channel”, ICTV, and “Ukraine” channels. In 2015, it came to seizing the servers, which, it should be noted, were returned two months later due to failure to prove Divan.TV’s guilt.

In recent years, Divan.TV has been accused by other companies of failing to fulfill financial obligations, and those companies also won in court:

• Lawsuit from the MGB Ukraine (History TV channel) for UAH 297,000.
• Fox lawsuit for $ 57,000.
• Lawsuit from Continent TV for UAH 96,000.
• Lawsuit from “Tekhnologii setei” for UAH 218 000.
• Lawsuit from Mediakast for UAH 154,000.
• Lawsuit from the Russian TV channel Dozhd for an unknown amount in a Russian court. Previously, a fine of UAH 350,000 was in the news.

AIN.UA contacted all the companies from the list. Only the Russian Dozhd and Continent TV did not respond to requests. The rest either said that they settled the issue, or gave non-public comments that were used to verify the remaining evidence.

Multimillion user base was ‘made up by the PR-service”

Tatsiy from Continent TV brought another accusation: when signing contracts, the company manipulates data on the number of subscribers:

Divan.TV declares in open sources that it provides its services in more than 200 countries and declares its subscriber base at the level of 700,000 subscribers. However, when it comes to negotiations about granting distribution rights for channels, Divan.TV underreports its base and specifies numbers that are hundred times less.

Representatives of Divan.TV did not comment on that. The size of the user base is important because content providers charge a flat fee for services. In Ukraine, it ranges from UAH 5 to 95 per each user that is subscribed to a paid package. It is beneficial for the Internet TV service to understate numbers in a conversation with content providers and to overestimate them for PR, including confusing paying subscriptions with lifetime registrations.

People who introduced themselves as top managers of Divan.TV, on the audio recording mentioned above, recognize the discrepancy between public and real data. Another quote from their conversation:

R.P.: – We constantly read in the press how successful you are, how many years you have already been profitable, and how all is well.

E.K .: – For this, we have a PR department. Do you believe everything that is written on the Internet?

R.P.: – I don’t know. We publish the truth about our company.

E.K .: – This is the choice that you made, we have a different choice. We have a PR department and it [works] separately. We often hear from many partners such statements [about the success of the project], but then we give access to billing and the questions disappear. You read one thing, and then you look and it is written in small print: “These are all subscribers not registered on a paid basis.” We understand that now it’s practically impossible to lie to about the subscriber base. We have never had 40,000 subscribers. And we cannot even dream about such a huge user base now – because we do not have such good content as others have.

The woman who introduced herself as Elena Kohanets tells another reason why the service needs to manipulate the user base – that is its activity in Western markets:

E.K .: – PR is focused more on the international market for attracting b2b partners from all over the globe. Somehow it is a custom to provide all the information in a good light. We do not interfere there. Free subscribers and views are written…

How much profit does Divan.TV generate and from what?

In a presentation by Andrey Kolodyuk for potential investors in February 2019, the service has 3 million users, who brought $5 million in revenue in 2019. But how many of the claimed 3 million users are paying users remains unknown. Unlike Netflix, many users of Divan.TV are not paying subscribers. And unlike Megogo, there is practically no monetization of users with a free package through advertising.

According to the source of AIN.UA’s editorial office in one of the content providers, the paying audience of Divan.TV in 2014 was 5,000 people globally, and in 2019 – 10,000 – 20,000 globally subscribed to a basic paid tariff. This is unverified data. But we are still talking about tens, not hundreds of thousands of paying users. The editors of AIN.UA below offer several approaches to checking the claimed revenue of a service.

For example, for Megogo to generate $ 5 million in revenue in 2017 on the Russian market (which is also the main one for Divan.TV, according to their own presentation), 350,000 users made at least one payment to it.

Based on the cost of Divan.TV subscription plans (from UAH 59 to 299 per month for Ukraine and up to $13 per month abroad) in average proportions, the service needs at least 500,000 paying users to generate $5 million per year.

350,000 or 500,0000 – all this is far more than the 40,000 paying users mentioned in the audio recording. Which, moreover, is declared as a difficult goal to achieve.

According to YouControl, LLC Divan.TV / Multimedia Group Ukraine showed a peak revenue of about UAH 14 million in 2016. And that is with the obligations of the company amounting to more than UAH 52 million.

Finart Capital Invest LLC – which accepts service payments in Ukraine – in 2017 showed UAH 13 million in revenue. In 2018, revenue decreased to UAH 10 million.

If it is true that according to Divan.TV, 54% of users are in the CIS, and the largest market in Russia, then Ukraine, at best, has a quarter of the audience. If we calculate that it brought in UAH 13 million, then the global revenue of Divan.TV in the most optimistic scenario would not exceed $2 million. But there is a nuance here.

Russia, as stated in the presentation, is the largest market for the service, but the Russian branch of Divan.TV LLC with registration in Belgorod does not demonstrate this.

According to the extract from the SPARK database (which is in possession of AIN.UA editorial office), the total debt of the enterprise is about 2.4 million rubles, while current assets are only worth 27,000 rubles. The company showed its revenue only once, in 2016, and it amounted to 585 (five hundred eighty-five) rubles. And in July 2019, by a court decision, Roskomnadzor also deprived Divan.TV LLC of mass media status and a broadcast license, according to the regulator’s website.

All that put together casts doubt on the veracity of alleged Divan.TV revenue. And user bases.

Investor confusion

Another question is how much investment the service attracted and from whom.

At the start of the project in 2011, it was reported that AVentures Capital invested $1 million. Later, in an interview with AIN.UA, Andrey Kolodyuk said that the investment account “is well into the millions.” Crunchbase reports that AVentures has invested $2.5 million in Divan.TV spread over two rounds between 2010 and 2011.

AIN.UA also managed to find a CV of the partner and co-owner of Divan.TV Denis Lukash, where it is indicated that he helped the company to raise $1.2 million in two rounds between 2010-2014. Finally, according to the presentation prepared by Divan.TV for investors, by 2019 the company raised a total of $6 million in a single round.

Divan.TV is still listed on the unofficial website of the AVentures Capital [Editor’s note: the unofficial website is listed in the fund’s profile on CrunchBase, the partners of the fund write emails from its domain, but the author couldn’t find the official site]. However, AVentures was not found among the legal structures of companies whose connection can be traced back to Divan.TV.

Yevgen Sysoyev, a Managing Partner of AVentures, confirmed this: Divan.TV is Andrey’s personal project. Why it appears on the fund’s website is unknown.

ICO that never happened

In 2018, Andrey Kolodyuk actively commented on Divan.TV’s plans to enter the ICO. The company planned to launch its own D1T token in the second quarter of 2019, and the updated Divan.TV 2.0 platform in the third quarter of 2019. Users would have to receive tokens in exchange for viewing ads and spend them to access premium content.

To launch a blockchain platform for advertisers, Divan.TV planned to attract bridge financing in the amount of $5 million. This is a short-term loan for the development of the company at 8% interest and without dilution of interest. Investors were promised a 20% discount in the next round.

Among others, Alexander Bornyakov, founder of the advertising company VertaMedia (Adtelligent), and now – Deputy Minister of Digital Transformation of Ukraine, was specified as a technology advisor and investor in the service.

In response to a request from AIN.UA, Alexander Bornyakov said that Divan.TV was going to use its Adtelligent platform. They really started working with Kolodyuk in 2018. But three months later, Kolodyuk decided not to hold an ICO: supposedly this is no longer interesting to anyone. “It became clear that there will be no ICO,” Bornyakov noted in a comment to AIN.UA. For a while, the companies still worked together, but it did not lead to anything concrete.

Now no one remembers the ICO. As well as plans to reach 120 million users. Or about debts to the American company Fox, which have not been repaid.

In the meantime, the service continues to work, carries out advertising campaigns, and enters into partnerships with TV producers. And Andrey Kolodyuk himself has already approved the idea of Alexander Tkachenko (in the past the general producer 1+1, currently the MP from the “Servant of the People” party) to introduce a tax on Netflix and YouTube content. After all, foreign services “should be put in the same conditions as Ukrainian services in terms of taxes.”

But as far as the same conditions for paying debts and disclosing performance indicators are concerned – he did not provide any details. In December 2019, his Cypriot Mikarnial Ltd increased the authorized capital of Finart Capital Invest LLC by UAH 1.7 million: from UAH 804,000 to UAH 2.56 million. This is more than what is owed to Fox. Nonetheless, the debt is now on the shoulders of a saleswoman from Obukhiv.