Civil entered the market a few months ago with the intention to provide a more transparent and democratic way for journalists to do their job. Nevertheless, this did not happen. Journalists are still waiting for their compensation arranged when they were hired by the company.
There are several employees that have shown that Civil said to journalists that the CVL virtual currency issued would be worth more than previously estimated. Nevertheless, the company had to suspend the Initial Coin Offering (ICO) due to the fact that there was no demand for these virtual currencies.
Civil was expected to be used by interested individuals paying for good quality journalism. Journalists would be paid for the content that they publish on the platform. Although the newsrooms with journalists are working properly, there is no CVL coin as previously expected.
One of the journalists working at the platform, Jay Cassano, left the Civil news outlet Sludge on November 8. He explained that he has 70% of his salary paid in tokens, but he did not receive this payment and he had to take loans to pay for his rent and student loans.
However, during a conversation with CoinDesk, Civil CEO Matt Iles, says that they have never promised the tokens to be worth more.
“We didn’t promise anyone tokens would be worth any specific amount,” Iles said. “Anytime we discussed potential token value with newsrooms, we made it clear we were making estimates and that there was risk involved.”
According to Iles, the CVL token restricts liquidity and volatility in order to attract only interested individuals that really want to participate in the network rather than speculators. Civil currently uses a strict Know-Your-Customer (KYC) process for interested investors. At the same time, it has partnered with the exchange AirSwap that restricts the access to CVL purchases.
Cassano said that Civil told reporters that the CVL tokens that were going to be used to pay journalists could be worth close to $0.75 dollars. Nevertheless, when they filed tax documents, the tokens were valued close to a penny.
Mr Cassano said that the team at Civil mentioned that the tokens were going to exceed the initial valuation and they could be worth even four times more. Another reporter working at Civil commented that the startup talked about the growth potential of the CVL cryptocurrency.
Due to the fact that sales were not going so well for the startup, they tried to attract larger token buyers to help the company reach the goal established at the beginning of the ICO. Iles said that as the sales were less than expected, they tried to contact large-scale token buyers. Nevertheless, he explains that there was never a promise or guarantee made about the future of these tokens. The company had to refund investors that purchased CVL tokens, giving back $8 million dollars in coins.
Cassano and the other employee at Civil said that they have not been given a date or timetable about when they will be receiving their coins.
It is important to mention that there are some questions regarding employee compensation. Preston Byrne, a partner at Byrne & Storm, P.C., a recognized law firm, said that different laws might apply to private offerings via employee contracts and not strictly public offerings.
About it, he mentioned:
“There are things that you can be given or possess that increase in value but aren’t a security. You’ve got to pay your people and you’ve got to be honest with them, otherwise, different questions arise.”
Civil might not have to be worried about the U.S. Securities and Exchange Commission (SEC) going behind it. The project returned all the funds to investors, which is the correct way to proceed in this cases. However, they will have to solve the issue with the employees working at the company.