FreeZone FOR BLOCKCHAIN BUSINESS WHITE PAPER

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3 Contents 1. What is FreeZone? 2. FreeZone: Free Economic Blockchain Zone and its Benefits 3. Who Needs FreeZone and Why? 4. Five Businesses of FreeZone 4.1 Universal Trading Platform 4.2 Payment System 4.3 Investment Bank 4.4 Bank 4.5 Marketing Agency 5. Libertarian Blockchain Community 6. Income Statement and Capitalization 7. Freezone Tokens 8. Use of Proceeds 9. ICO 10. Our Team 11. Conclusion Contacts

4 1. What is FreeZone? FreeZone is: A free economic zone created especially for blockchain-based business and cryptocurrency operations. Within this zone, blockchain business can operate legally, protected from persecution by external governments and regulatory agencies, and free from income tax and tax on cryptocurrency transactions. An infrastructure aimed to drastically simplify the running of business and operations involving cryptocurrencies for both companies and individuals within the FCEZ (Free Crypto Economic Zone), while also offering services to foreign entities. This infrastructure is made up of 5 main enterprises: a universal trading platform (UTP), a payment system, a bank, an investment bank, and a marketing agency, all of which will work with both cryptocurrencies and fiat money. A blockchain community. Part of FreeZone s own profits will be allocated to developing programs for this community with libertarian ideals. We plan to provide services for free or at cost, including: education; assistance in obtaining citizenship; asset protection via blockchain technology; legal assistance, human rights protection; and much more. Moreover, we plan to create business opportunities for community members. This unique blend of corporation and community will ensure a perfect synergy, with each one helping the other grow. FREE ECONOMIC ZONE INFRASTRUCTURE BLOCKCHAIN COMMUNITY 3

5 2. FreeZone: Free Economic Blockchain Zone and its Benefits In recent times the number of startups attracting investment to finance their blockchain technology activities has spiked. Without question 2017 is the Year of Cryptocurrencies, and, most likely, 2018 is set to become the year of blockchain projects that will overhaul the modern world (it is expected that in 2018 there will be many ready-made products which will be immediately applied in the real world, in addition to dozens of promising startups that will launch ICOs with the potential to disrupt the status quo and become competitors for already existing projects). However, at present it is extremely difficult to find a place with favorable conditions to launch and develop blockchain projects. Investors and blockchain business founders across the globe are forced to take financial and non-financial risks by participating in such projects. Overall uncertainty in regarding cryptocurrency market regulation, as well as the lack of infrastructure to make the life of entrepreneurs and developers easier may complicate any possible market progress. At the moment there is practically no favorable ecosystem for conducting business in the blockchain sphere. In light of the existing issues, we are establishing the world s first Free Crypto Economic Zone that will function within an existing state, creating unique conditions for blockchain and the realization of crypto projects. The FCEZ will be built on the following principles: legitimization of the free flow of cryptocurrencies and holding ICOs 0% VAT and income tax for blockchain businesses support for blockchain business from local regulatory agencies protection of investors interests through legal precedents assurance of business transparency infrastructure for blockchain project development 4

6 In the foreseeable future, a legal framework is to be developed to smoothly regulate crypto and ICO markets, making them fully legitimate. Provisions of the FCEZ legal framework: free flow of cryptocurrencies within the FCEZ ICO realization use of fiat money in ICOs assurance of business transparency compliance with KYC & AML standards licensing for financial activity on the crypto market protection of investors rights preferential taxation dispute resolution in court We have conducted a comprehensive study of 182 governments using criteria such as business conditions, legislative framework, economic and political climate, regulatory agencies attitude towards cryptocurrency and blockchain businesses, feasibility of free economic zone creation, currency regulation and control, cost of labor and availability of qualified staff, government flexibility and liberalism. Based on that study, we have chosen 29 countries for preliminary negotiations. After completing these talks, we have narrowed it down to a short-list of 12 states interested in the project and we are currently holding negotiations with them. We are set to reach an agreement with at least one state of such states to create the Free Crypto Economic Zone and expect additional agreements with up to two other countries. 29 NEGOTIATIONS 12 INTERESTED STATES 2-3 AGREEMENTS TO CREATE THE FCEZ FCEZ 182 RESEARCH 5

7 3. Who Needs FreeZone and Why? FreeZone is a unique, win-win solution that benefits all parties involved in the project. The country chosen to become the home of the FCEZ enjoys the following benefits: an influx of foreign investment, job creation, GDP growth, the reputation of being a progressive state that supports new technologies, advancement in various economic, quality of life, and freedom ratings, growth in the government s popularity among its citizens Businesses registered within the FCEZ have the opportunity to completely legitimately run blockchain and cryptocurrency operations, all while bypassing income tax and using infrastructure built and adapted specifically for blockchain-based business Companies launching ICOs receive the entire range of necessary services from FreeZone, including logistic, legal, and financial assistance, expert project reviews, as well as marketing assistance and help attracting investors Clients of FreeZone enterprises, both private and corporate, conduct cryptocurrency transactions under moderate KYC & AML conditions, in a favorable tax climate, and using various services both familiar and unique to the market. FreeZone token holders who invest in the ICO profit from their assets. At least 50% of the company s proceeds will go to initial investors. In addition, they can profit from the expected sharp growth in the token s value, due to FreeZone enterprises profitability and the fact that FreeZone tokens, while being used to pay for a range of services, will not be re-issued following the ICO. Members of the community have access to a whole range of social services offered for free or at cost, while reaching out to like-minded people and profiting from our referral programs STATE Economic growth and investment, viewed as a progressive state, advances in life quality for the population BLOCKCHAIN BUSINESSES Opportunity to conduct business legitimately and take advantage of developed market infrastructure BLOCKCHAIN COMMUNITY Social services provided for free or at cost, income, interaction with likeminded people ICO PROJECTS Full ICO launching service, no legal uncertainty, moderate KYC/AML FREEZONE TOKEN HOLDERS Income from profit distribution and token price growth, tokens used to pay for FreeZone services, influence decisions regarding the blockchain community 6

8 4. Five Businesses of FreeZone 4.1 Universal Trading Platform We are developing a universal trading platform where users will be able to conduct transactions with cryptocurrencies, derivatives, commodities, and various other types of traditional goods. Competitive advantages compared to existing cryptocurrency exchanges: Low risk of disputes between traders and government institutions that would otherwise result from stringent state-backed KYC & AML regulatory procedures Easy deposit and withdrawal of funds in any currency (crypto or fiat) through our own bank and payment systemwide range of traded assets The possibility to trade any asset from a single account The opportunity to trade using an account within our payment system, without placing money into the market; the account can be used simultaneously for market trades and for purchasing goods and services, online and offline A referral program that creates additional income opportunities for community members and traders alike Margin trading through leverage provided by other traders or our bank Fast and easy floating of new ICO tokens on the market through our investment bank Estimated Revenue We plan to reach a daily turnover of approximately $600 million by ; the revenue of a second-tier cryptocurrency exchange today. This is an especially conservative forecast, especially when one takes continuing rapid market growth into account (cryptocurrency trading volumes grew more than 10-fold over the last two quarters of 2017). 0.15% The average aggregate commission from both parties per trade on our universal trading platform The market commission rate will vary for different assets, but the average rate is expected to be an aggregate of 0.15% from both parties, bringing estimated daily revenue to $900,000 per day or $330 million per annum. 7

9 Investments $15 Million Income Statement Forecast Net revenue Operating expenses Sales and marketing General and administrative Net income USD, mln Payment System We are developing a payment system that integrates a wide range of payment tools cryptocurrencies, fiat currencies and e-money. Competitive advantages compared to existing payment systems: Ability to accept fiat money in exchange for tokens during ICOs without taking the risk of losing funds or having them frozen due to legal, KYC & AML issues, which are solved by our infrastructure Ability to hold an account in one currency (crypto, fiat, e-money) and purchase goods, services and assets in any other currency due to rapid automatic conversion Ability to accept all currencies (crypto, fiat, e-money) through merchant accounts for goods and service providers Ability to use payment system account funds for trading any asset within the universal trading platform Estimated Revenue Profits from servicing ICOs. The ICO market has grown from $250 million in 2016 to $6.5 billion in Moreover, the expansion in market volume in the last quarter of 2017 alone amounted to $3.2 billion. Experts expect market volume to reach at least $30 billion in 2019, based on more conservative estimates. 8

10 $30B $6.5B $250M We expect to service 15% of the ICO market at FreeZone by creating an integrated infrastructure, bringing annual revenues of $4.5 billion. For ICOs that accept fiat currency in exchange for tokens, fiat revenue amounts to nearly half of the proceeds, bringing that revenue to $2.25 million annually. With a 4% fee for these transactions, we estimate an annual income of $90 million. Global annual online trading volumes currently stand at $2.5 trillion, and it this figure is rising. The cryptocurrency market s share of this is just 1% but is also growing. With the rise of tools allowing purchases of goods using cryptocurrency, its market share in can be estimated at around $50 billion. We aim at capturing 2% of that market, bringing merchant accounts annual revenue in 2020 to roughly $1 billion. With approximately 5% of commission and conversion income, we estimate annual income to be around $100 million. Investments $15 Million Income Statement Forecast Net revenue Cost of revenue Gross profit Operating expenses Sales and marketing USD, mln General and administrative 10 Net income 75 9

11 4.3 Investment Bank We are developing an investment bank which specializes in cryptocurrency and blockchain asset investment. At present, there are no firms that offer a full range of cryptocurrency investment services on the market. Competitive advantages and services: Full range of ICO launching services, including: logistic and legal support, marketing, financial system optimization, presentation to potential investors, token sale organization and liquidity support, escrow and smart contract development. Consulting services for token issuers and cryptocurrency investors Brokerage for cryptocurrency markets Trust management of assets for investors looking to invest in crypto assets Cryptocurrency investment fund management Estimated Revenue As mentioned above, the ICO market volume is expected to be $30 billion in 2019 according to more conservative estimates. We expect to cater to a 5% share of that market due to a unique integrated approach to conducting ICOs, bringing annual revenue to $1.5 billion. With a 6% income from funds raised through ICOs, we estimate annual earnings of $90 million. We also expect to manage approximately $2 billion through trust and investment funds. A 2% income from these assets brings annual earnings from fund management to $40 million. $30B ICO market $1.5B FreeZone investment banking market share $90M expected income from ICO services 10

12 Investments $5 Million Income Statement Forecast Net revenue Cost of revenue Gross profit Operating expenses Sales and marketing USD, mln General and administrative 5 Net income Bank The bank will specialize in cryptocurrency operation services. Currently, there is no such structure on the market. Competitive advantages and services: Account management in various cryptocurrencies, fiat currencies, and e-money Multi-currency debit and credit card issue and maintenance (both crypto and fiat) Fast and easy conversion between cryptocurrencies, fiat money and e-money Deposits in various cryptocurrencies Loans secured by cryptocurrency and blockchain assets Cryptocurrency-based leverage for margin trading 11

13 Estimated Revenue We are set to establish the bank after launching the universal trading platform, payment system, and investment bank. These enterprises are expected to become the main source of the bank s clients, and based on the three businesses volume, we estimate bank assets to be approximately $1.5 billion. On average, the return on assets as a share of net profit amounts to 1-2% for fiat banks offering similar services. For the currently undeveloped crypto market, fees will remain significantly higher for an extended period of time. Based on this, we expect a minimum of a 4% return on assets, bringing annual net profit to approximately $60 million. Investments $40 Million Income Statement Forecast Net revenue Cost of revenue Gross profit Operating expenses Sales and marketing USD, mln General and administrative 15 Net income 60 12

14 4.5 Marketing Agency Competitive advantages and services to be provided: Integrated marketing and PR management for projects launching ICOs, including working with specialized media, blogs and forums, contextual, media and native advertising, opinion-leader involvement, referral programs, SMM, blockchain conferences and meetups Developing referral programs to attract blockchain business clients and ICO investors Integrating the market s existing referral programs into one platform, creating additional income opportunities for community members Estimated Revenue A large share of the proceeds will be generated by integrated ICO marketing all projects conducting ICOs via our investment bank ($1.5 billion in , as stated above) will go through the marketing agency. We expect a similar number of ICO projects to be involved through other channels. That brings the estimated annual volume of ICO marketing projects the agency works with to $3 billion. On average, ICO projects allocate 5% of revenue to the marketing budget, bringing the aggregate marketing turnover to $150 million a year. With a 20% fee for services rendered, our annual proceeds are estimated at $30 million. SEO SMM ICO projects Marketing agency ADS Investors $ $ $ $ 13

15 Investments $5 Million Income Statement Forecast Net revenue Operating expenses Sales and marketing General and administrative Net income USD, mln

16 5. Libertarian Blockchain Community We plan to cultivate and support a vast community around our project, creating a synergy between business and society. Libertarian values are familiar to the crypto community. By creating a community and developing the services it offers, we answer the needs of its members Community members are interested in FreeZone s growth and development, and are motivated to support the business and contribute to it Social programs that form part of the project will help promote blockchain and cryptocurrencies, accelerating blockchain integration into the global economy FreeZone will provide a range of social services for free or at cost, financing them with funds allocated from net profits. The selection of services for on offer will be determined by token holders votes (1 token = 1 vote). The services we are currently exploring include: free education assistance with adoption charity work human rights groups contact service legal assistance assistance arranging euthanasia escrow services transhumanism development services employment assistance for freelancers referral programs visa support social networking assistance in obtaining citizenship global sharing assistance in obtaining asylum Self-actualisation Share of profits Income FreeZone business FreeZone community Development Happy user 15

17 6. Income Statement and Capitalization Income statement forecast for (USD, mln) Net revenue Cost of revenue Gross profit Operating expenses Sales and marketing General and administrative Net income We have highlighted three project stages in our forecast: Preparing for launch - up to October 2018 Launch and active promotion - October 2018 to March 2021 Organic business growth due to market growth - from March 2021 Capitalization forecast (USD, mln) Capitalization FreeZone Revenue and Capitalization Revenue (USD, mln) Capitalization (USD, mln) Revenue Capitalization 16

18 Our capitalization forecast for late 2018 is based on a comparative approach to blockchain projects preparing for launch, but not yet generating a steady cash flow. Such an approach suggests our business value doubling within 6 months based solely on completion of the first stage of the project. Starting from 2019, the forecast is built using a P/E multiplier, based on the 2017 P/E S&P 500 index, which was 22. Currently, blockchain projects have a higher index, making this a conservative forecast. Return on Investments (USD, mln) Minimal dividend distribution Investors share Our forecast for investment returns is based on our obligation to distribute a minimum of 50% of annual revenue. Taking into account an estimated 50% distribution of tokens during the ICO, the return on investment timeframe through dividends alone amounts to 2.5 years. Business growth is going to be accompanied by capitalization growth and token value accordingly. Based on the calculations above, the company s capitalization will grow 78.5 times (7,750%), from $200 million (during the ICO) to $15,700 million. Average annual investment returns in that period are estimated at 1,550%. 17

19 7. Freezone Tokens We are planning to attract $100 million to finance the project thorough the creation and sale of FreeZone tokens. The tokens will be created based on Ethereum standard ERC-20. The total amount of the tokens to be issued is 1 billion. 500 millionn tokens will be sold during the ICO, whilst 200 million. tokens are to be held by FreeZone Corp. and will be used to support the ecosystem, bounty-program, and project promotion, as well as for the secondary placement. 300 million. tokens will be gradually transferred into the possession of the project s founders. The first 100 million tokens will become their property 12 months after the ICO. Subsequently, 18, 24, 30 and 36 months after the ICO is finished, 50 million tokens for each 6 month period will be transferred into their possession. The issuance of FreeZone tokens takes place only once and amounts to 1 billion tokens. No further tokens will be issued. No less than 50% of FreeZone Corp. net profit will be divided among FreeZone token holders. The services provided by FreeZone can be paid for with tokens. The development path of the blockchain community and the social services it provides will be defined by a system of voting, and the number of votes of one project participant can exercise will equal the number of tokens they hold. The tokens held by FreeZone Corp. and the tokens that are gradually transferred into possession of the project founders following the ICO completion date form part of the profit distribution and voting on the same terms as the rest of the tokens. CO-FOUNDERS UNDER FREEZONE CORP. CONTROL TOKENS TOKEN SALE TOKENS TOKENS TOKENS 18

20 8. Use of Proceeds Use of proceeds from the token sale will be arranged the following way: Use of Proceeds (USD, mln) 20% 15% Trading Platform Payment System Investment Bank 5% 15% Bank Marketing Agency Free Crypto Economic Zone 5% 40% The share amounts in the use of proceeds are fixed proportions where the ICO is successful (if the sale target is achieved or close to that). In case the amount of capital raised is less than $100 million, the budget distribution will take place based on the actual achieved level of the project (milestones) development achieved in accordance with the figures below: UP TO $15mln $15 - $30mln $30 - $40mln $40 - $60mln $60 - $100mln + Crypto invest bank Universal Trading Platform is launched + Fiat cryptopayment system + Free Crypto Economic Zone established in one country + Marketing infrastructure + Free Crypto Economic Zone infrastructure development + Fiat Crypto Bank 19

21 9. ICO Overview Token name Code Start Date Duration of Token Sale * Token Allocation Cap Tokens to be Sold Token Sale Price Target Accepted Forms of Payment Minimum Contribution Amount Maximum Contribution Amount Token Type FreeZone FRZ March, days 1,000,000, ,000,000 (50%) *see the information below $100,000,000 BTC, ETH, BCH, LTC and fiat payments ($,,,, ) 0.1 BTC, 0.5ETH, 0.3BCH, 3LTC, 500, $600, 500, 600 N/A ERC-20 standard-based Ethereum token *The token price is defined and published on the FreeZone website on the day the tokens are distributed. The price is defined according to the following algorithm: payments are calculated based on the Ethereum conversion rate on the date of payment, multiplied by the final bonus coefficients; these numbers are rounded to the nearest whole; the result is the final amount received in Ethereum, taking the bonuses into account. This total is divided by 500 million tokens, and the resulting number is the basic token price in Ethereum. The amount of tokens, received by the customer, is calculated as the amount of money paid, recalculated in Ethereum, multiplied by the final bonus coefficient and divided by the basic token price. This final number is rounded to the closest whole based on standard mathematical principles. The final amount tokens sold may differ slightly from the amount of 500 million due to this rounding discrepancy. More information is available in the Terms and Conditions section at 20

22 Bonuses and Bounty Customers can receive 3 types of bonuses: Early registration bonus Early payment bonus Referral program participation bonus The bonus coefficient for early registration is This bonus is guaranteed for customers, who register for private accounts and provide the necessary personal data before the ICO start date and while early registration is open. The bonus coefficient for the early payment is calculated as follows: ICO BONUS 15% 10% 5% 1-7 days 8-14 days days The project s referral program is described on the project s official website. The final bonus coefficient for customers is calculated by multiplying together all the bonus coefficients, that the customers have. Example: the customer registered during early registration and, having paid for the token purchase on the first day of ICO, receives the following bonus coefficient: 1.05 x 1.15 = For promotion of the project there is a bounty program. It is arranged on an individual basis with those ready and able to help promote the project. To pay for the bounty program, some tokens from the amount held by FreeZone Corp. (the share of 200 million tokens) will be used. As part of this program the following activities are to take place: Regular posts about the project on social networks with links to the official website Publications on web-portals, not specific to this topic, but having a solid readership Publications on websites, having a big or average number of readers/followers, but specializing in the topic at hand Publishing videos/short movies about the project on YouTube and on social networks Translation of the White Paper, leading a thread about the project on and in the native language and publishing the translations of the projects official documents on these platforms Permanent publication of the link to the project s website in one's personal signature on and Direct referral of token buyers to the project Bringing in brand ambassadors with widespread popularity to the sphere 21

23 10. Our Team Most of the projects that launch ICO campaigns have certain experience in the creation of some software product, but do not have the relevant experience in business development. Our key difference and main competitive advantage is that we treat the project as a business and use the rich and diverse experience that our team has in launching, managing and developing business. The FreeZone project was founded by a group of businessmen who have successfully built more than 10 companies from the ground up, including an investment firm, an outsourcing IT firm, online and offline retail chains, a pawnshop chain, a wholesale business, and a recommendation service. More than 30 specialists in various fields are currently working on the project. Detailed information about the FreeZone team and project advisors can be found on our website: Conclusion The blockchain and cryptocurrency market is growing rapidly, and yet there is hardly any infrastructure that would yield favorable legal, financial, economic, logistic, and marketing conditions for running a business in this market. We have successful experience in building businesses and infrastructure, and we will apply it to the creation of a specialized free economic zone with five infrastructural enterprises a universal trading platform, payment system, bank, investment bank and marketing agency resulting in a Libertarian blockchain community. The existence of a market sector with colossal unsatisfied demand for infrastructure could allow us to secure significantly large returns on investment. We estimate an investment return of 150% in , and by 2022 the FreeZone token s value is expected to grow 80-fold. Most blockchain projects work on creating a product. We re creating an entire ecosystem where other blockchain products can thrive. 22

24 Contacts Freezone.one facebook.com/freecryptozone twitter.com/freeland_one instagram.com/freeland_one t.me/freezone_one youtube.com/channel/uc6dhh89snpdcaneyah2olzg linkedin.com/company/