Privatix - investment attractiveness report (Digital Rating Agency)

EXPRESS INVESTMENT EVALUATION OF
ICO PROJECT
privatix.io
ICO 19.10.2017
Performed by
Digital Rating Agency
digrate.com
Low level
Low development potential,
eventual speculative
investments

Investment evaluation of the ICO project
PRIVATIX
LIMITATION OF LIABILITY
This report is the intellectual property of DigRate, the following content is intended for informational purposes only. This
information can not be distributed in any way and in any form without prior consent from DigRate and links to
www.digrate.com.
This evaluation expresses the view of DigRate and is not a fact-finding or recommendation to buy, hold or sell those or
other assets, make investment decisions. DigRate assumes no responsibility for any consequences, interpretations,
conclusions, recommendations or other actions directly or indirectly related to the evaluation performed by DigRate’s
rating actions, as well as the observations and conclusions contained in the rating report and press releases, or absence
of all of the above. The only source that reflects the current state of assessments is the official website
www.digrate.com.
The DigRate team expresses its respect to all the enthusiasts of the cryptocurrency world.
2

PRIVATIX
General Information 4
Investment Evaluation 5
Fraud Rate 37
Conclusion 38
Recommendations 39
CONTENTS 3

PRIVATIX
GENERAL INFORMATION
▪ The development of Privatix Limited is a network of Privatix that allows to reduce costs and increase the profitability
of the business in the consumer VPN market, eliminating the intermediary services and giving people the
opportunity to share their communication channels through P2P network, which, according to the Company should
increase the overall efficiency of information exchange on the Internet.
▪ Privatix is decentralized and autonomous P2P VPN Network on blockchain with the first Internet bandwidth
marketplace powered by its own crypto-economy. Privatix will allow users to sell their broadband access to the
other network members. To make a profit they will only need to install a free software. All financial settlements
between the agents and clients of the Privatix network will be made in the PRIX cryptocurrency. When buying
resources from participants in the transaction, a commission will be charged, which will go to the development of
the network.
▪ The Project also plans to open new opportunities for creating apps and services on the basis of a new network in
such areas as CDN, data collection and Business Intelligence, anti-censorship SDK for apps and others.
4

PRIVATIX
INVESTMENT EVALUATION | Market 5
Does a problem which the Project plans to solve really exist?
Today the society formulates such requirements for VPN services as: to be cheap and fast, to exclude the possibility of user monitoring and
spying, and eliminate other problems associated with visiting unwanted web-sites and other actions that might be considered to be illegal in
some of the jurisdictions.
Such solutions already exist, namely: to buy a VPS server, install OpenVPN there and use the network through this structure. However, mostly
the IT professionals and savvy network users are aware of this opportunity, while ordinary people have to rely on commercial VPN
service-providers with their own shortcomings, such as: ability to track user’s activity, traffic prioritization, speed limits, and others.
It is also possible to use services such as Tor, which are relatively safe. But this solution comes with its own disadvantages, which are the speed
limit and blocking of the IP addresses of the output nodes by some services.
In such situation, it might seem that the blockchain technology could be a perfect solution. However, there are several problems that will be
inherent in both the blockchain-based and more traditional solutions:
● The ability to create shell output nodes that will allow examination and analysis of the outgoing traffic;
● Likelihood to be punished for someone from the agent's output node who uploaded illegal files to the network or engaged in illegal
activities;

PRIVATIX
Is there a problem that the project plans to solve?
COMMENT:
Yes, the problem of the lack of a centralized VPN service that would guarantee the anonymity of customers, which costs considerable funds,
provides low or medium quality, and can be blocked with the help of advanced DPI does exist in the market. However, for advanced Internet
users and IT specialist there are possible solutions and alternative services that partially solve these problems. However, neither blockchain nor
centralized VPN services can solve the problem of the ability to create shell output nodes or prevent a criminal responsibility in case of
downloading illegal content from the agent's output node. Therefore, it will be much more efficient to choose a solution in a jurisdiction with
transparent law enforcement and, for example, with a “warrant canary” in place, for safe surfing.
7 6 5 4 3 2 1
Totally
agree
Agree Rather
agree than
disagree
Neutral Rather
disagree
than agree
Disagree Totally
disagree

PRIVATIX
Is the product offered by the Project the best in segment?
COMMENT:
The question whether the future product will be the best in the segment is controversial. That is justified by the presence
on the market of similar and major competitors, such as: Tor (https://www.torproject.org), Hola (http://hola.org), CENO
(https://censorship.no), Mysterium Network (http://mysterium.network), the first three of which have already gained fame
among users and are in the lead throughout history in comparison with Privatix.io or centralized Privatix. That is why the
product is hard to be called the best unless the Project presents the working product and wins the hearts and minds of
the users.
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agree
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disagree
Neutral Rather
disagree
than agree
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disagree

PRIVATIX
Did the Team show understanding of the competitive environment and present a clear plan to fight the market
players?
COMMENT:
The Team showed or mentioned only some of the existing competitors, neither provided clear competitive advantages,
nor presented a competitor-beating strategy.
7 6 5 4 3 2 1
Totally
agree
Agree Rather
agree than
disagree
Neutral Rather
disagree
than agree
Disagree Totally
disagree

PRIVATIX
INVESTMENT EVALUATION | Business 9
Is the blockchain a solution to the market problem?
COMMENT:
The question whether the blockchain is a solution to this problem is controversial. A decentralized VPN network with
P2P connection can be implemented without the use of blockchain technology (e.g. Tor, Hola, and CENO). The
blockchain itself will only help to make payments between the system participants and can serve as a solution that
cannot be blocked (by currently available technologies). However, the possibility of payments in PRIX is a doubtful
competitive advantage.
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agree than
disagree
Neutral Rather
disagree
than agree
Disagree Totally
disagree

PRIVATIX
Did the Project show an operating business model that allows to conduct a stable activity?
Excerpt from the White Paper (ENG), Section: 4. Business model, p. 14
All financial relationships between Agents and Clients will be in PRIX crypto-currency only. Every token exchange linked to payment for internet
broadband will be subject to a fee that will be accumulated by Privatix for maintenance and future development. The fee will be in the range up
to 1% of the transaction amount. All operations except payments for internet bandwidth, like token trades on exchanges, will be free from any
fees.
Excerpt from the White Paper (ENG), Section: Business model, Chapter: 4.2 Proof of Concept(PoC) products, p.
16
The first product we will focus on will be a decentralized unblockable VPN on blockchain that we believe will address the challenges facing
cybersecurity and internet censorship in the digital sphere forever. We expect to totally change the consumer VPN market, enabling people to
use VPN for free by sharing their own network, or pay less than $5-10 per year (10-20 times less than current centralized VPN prices).
Excerpt from the White Paper (ENG), Section: Business model, Chapter: 4.3 Long-term strategy, p. 16
At this time we predict the network will include tens of thousands or even millions of Agents. By developing a variety of products based on its
foundations, the network will start taking on a life of its own. Privatix will benefit only from the network token exchanges fee and will develop the
infrastructure of the network and products.

PRIVATIX
Did the Project show an operating business model that allows to conduct a stable activity?
COMMENT:
The Project plans to charge a commission of "up to 1%" for the purchase / sale of internet broadband, but it does not
indicate the basis this commission will be determined on and how did the Team come up with “1%” fee specifically.
The Project expects that payments in PRIX can save significant funds for customers, but the cost of PRIX can be easily
inflated by speculative groups of traders.
The Project expects that the network will begin to live its own life, "we predict the network will include tens of thousands
or even millions of Agents", but did not submit plans for implementing this strategy.
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disagree
than agree
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disagree

PRIVATIX
Does the Team already have a working product that they sell to their customers?
The Project Team is formed on the basis of the already operating company Privatix Limited, which provides a free VPN
service (with the option of a "premium" subscription). This service provides users with the possibility of private, safe, and
unlimited Internet surfing.
Also, the Privatix team successfully implemented two other projects – Temp-mail (https://temp-mail.org), and 5VPN
(https://5vpn.net).

PRIVATIX
Does the Team already have a working product that they sell to their customers?
COMMENT:
The company is already actively working and selling Privatix VPN service, the only difference from the ICO project is its
standard centralized technical architecture. However, the product offered during the ICO does not exist yet.
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PRIVATIX
Did the Team present a clear Road Map and financial plan?
COMMENT:
A Road Map with a satisfactory degree of details, with some clauses on the implementation of the project is presented
on the website.
No financial plan was presented.
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PRIVATIX
INVESTMENT EVALUATION | Technical component 15
Is the Project technology safe for network members?
COMMENT:
Data of network clients can be intercepted by unscrupulous agents when they visit websites that do not support HTTPS
and if the client traffic is not encrypted using SSL and TLS mechanisms.
At the same time, network agents carry significant legal risks in the event of clients using their channels for illegal
actions.
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disagree
Neutral Rather
disagree
than agree
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disagree

PRIVATIX
INVESTMENT EVALUATION | Economic component 16
Is the emission of tokens limited? Is there a solid asset or value base that would protect current holders from
devaluation of their holdings?
COMMENT:
Project Tokens have a limited emission of 10,000,000 PRIX, all unsold tokens will be destroyed.
A significant disadvantage of PRIX is the fact that the Project using tokens offers a fairly controversial and narrow
solution, that can negatively affect the demand for these tokens, that will cause a decrease in their internal and market
value.
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disagree
than agree
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disagree

PRIVATIX
INVESTMENT EVALUATION | Economic component 17
Are Project tokens protected from market manipulations?
COMMENT:
Project tokens are not protected against possible market manipulations by large speculators (Whales, and Dump &
Pump groups), which poses a serious threat to the members’ benefits for receiving payments in PRIX tokens, as well as
to customers of the network because the payment for the service can change significantly under the influence of the
market sentiment.
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disagree

PRIVATIX
INVESTMENT EVALUATION | Legal component 18
Privatix Limited* is a company in the jurisdiction of the Republic of Cyprus (EU), registered at 69 Arch. Makariou III,
TLAIS TOWER, 3rd floor, Office 301, 1070, Nicosia, CYPRUS
ΕΛΕΑΝΑ ΧΡΙΣΤΟΔΟΥΛΟΥ - Director
The value of the authorized share capital is not available in the open sources
Private Limited Company “PRIVATIX LIMITED”, registration number: ΗΕ 349889
Has been active since 12.08.2015
Is the legal structure of the company transparent?
* Source: https://efiling.drcor.mcit.gov.cy/DrcorPublic/SearchResults.aspx?name=%25&number=349889&searchtype=optStartMatch&index=1&lang=EN&tname=%25&sc=1&cultureInfo=en-AU

PRIVATIX
Is the legal structure of the company transparent?
COMMENT:
Data on the authorized share capital is not available in the open sources about the Privatix Limited. The connection
between Dmitry Rusakov (who is declared as the founder and CEO of the Company) with the legal entity Privatix
Limited is neither identifiable nor confirmable.
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PRIVATIX
Did the Project take preventive measures to avoid problems with regulators of the ICO market?
The only preventive measure taken by the Company is the following answer to the question in the FAQ section on the
website.

PRIVATIX
Did the Project take preventive measures to avoid problems with regulators of the ICO market?
COMMENT:
The only preventive measure taken by the Project is the answer on the website in the FAQ section that the project's
tokens do not sell a share in the business and that the company prefers that US citizens do not participate in the sale.
However, the Project does not mention citizens of China, Singapore and Hong Kong, whose investments can cause
serious problems for the whole project.
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PRIVATIX
Did the Project legally secure all agents of the Privatix Network?
The company reports in the official White Paper that it promises to develop a legal scheme that will protect the owners
of outbound gateways (network agents) from using their communication node for illegal activity.
Privatix promises that the legal responsibility of the agent in this scheme will be transferred to the company itself and
that each agent will be provided with a document stating that Privatix leases the communication channels of the agent
and bears all responsibility for it. Agent can print this document in the dashboard. The document will specify the IP
address and hash in the blockchain network. After printing the document, the agent will be able to add custom data
there such as address, name and so on.

PRIVATIX
Has the Project legally secured all agents of the Privatix Network?
COMMENT:
The project only promises to develop legal protection for network agents, which will be presented only by a single document.
However, neither the details of the legal protection nor the promised document were submitted.
Moreover, this protection is not going to be efficient due to the various legislative bases of countries and the practice of various
legal interpretations. A glowing example is the Dmitry Bogatov’ case, who had installed Tor's output node (agents of the Privatix
Network) on his computer and after that was arrested by the decision of the Presnensky District Court of Moscow on April 10 and
charged with incitement of terrorist activities or justifying terrorism (part 2 of Article 205.2 Criminal Code of the Russian
Federation), and with the organization of mass riots (part 1 of Article 212 of the Criminal Code), the only evidence of which was the
use of Dmitry’ IP as Dmitry gave his address to everyone who used the Tor network.
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PRIVATIX
INVESTMENT EVALUATION | Team 24
Does the project team has considerable experience and impressive achievements?
Was born in Israel. Received a bachelor's degree in Economics and Management from the Max Stern
Academic College of Emek Yezreel in Israel in 2009.
2001-2005 – served in the Air Force of Israel
2005-2012 – Founder and CEO of Rusakov Marketing
2012-present – Founder and CEO of VPN service https://5vpn.net (Five VPN Star Service)
2015-present – Founder and CEO of the service https://temp-mail.org
2015-present – Founder and CEO of VPN service https://privatix.com/
Dmitry Rusakov
Founder, CEO

PRIVATIX
Was born in Moscow. Graduated from the Bauman Moscow State Technical University in 2002.
2002-2004 – Developer in Turkey.ru
2005-2007 – System Administrator in Di-Net
2008-2009 – Developer in AdvPeople
2003-2010 – System Administrator, Developer in VirtualServer.Ru
2011-2014 – took temporary developer roles in 5VPN, IMA Group, Sitcam and Crisp Message
2014-2014 – Lead Developer in the Recommendation Service
2014-2015 – Developer in Kindbeetle
2010-2016 – Developer in SmartTeleMax
Nikita Kuznetsov
Co-Founder, CTO

PRIVATIX
Was born in Kazakhstan. No information on education is available in open sources.
2010-present – Co-founder and COO of VPN service https://5vpn.net (Five VPN Star Service)
2012-present – Co-founder and COO of service https://temp-mail.org
2015-present – Co-founder and COO of VPN service https://privatix.com/
Dmitry Rubtsov
Co-founder, COO, Business Development Director
Other team members
Other members of the Team occupy technical positions at Privatix Limited, additional useful information on
the Internet and links to their profiles in Linkedin are available, but most of the companies indicated in the
Team's experience can not be confirmed.

PRIVATIX
COMMENT:
The Team definitely has shown entrepreneurial abilities, but it does not have any deep industrial experience or
achievements (apart from the founder of the Project, who launched successfully three other companies).
Reliability of the information presented raises certain issues, because Dmitry Rubtsov declares himself as a Сo-founder
of https://5vpn.net (Five VPN Star Service), https://temp-mail.org, and https://privatix.com/ in 2010, 2012 and 2015,
respectively, while Dmitry Rusakov indicates that he was the founder of these companies in 2012, 2015 and 2015,
respectively, which casts doubt on his involvement in the establishment of these projects.
7 6 5 4 3 2 1
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agree than
disagree
Neutral Rather
disagree
than agree
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disagree

PRIVATIX
Is the Project Team well known in professional circles?
COMMENT:
The Project Team is quite young and consists of entrepreneurs who already have experience in running a similar
business. At the same time, it was not possible to reveal wide popularity or authority and recognition in professional
networks or IT circles.
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PRIVATIX
INVESTMENT EVALUATION | Project support 29
Does the Project have a strong Advisory Board team?
Michael Bereslavsky
Investor, Entrepreneur, Business
Adviser
Received a bachelor's degree in computer
science from the Technion - Israel Institute
of Technology in 2007.
2005-present – Vice President of Absorb
2008-present – Founder and CEO of
Domain Magnate
2017-present – Adviser of the VPN service
https://privatix.com/
There is no additional useful information on
the Internet.
Andrey Tseitlin
Computer science engineer and
system architect
As stated on the project's website, Andrey
holds the position of CTO and is a leading
developer in successful Israeli companies.
Andrey has a bachelor's degree in electrical
and electronic engineering from HIT
Academy and is a blockchain enthusiast
since 2015.
There is no additional information on the
Internet about Ivan Devyatkov. The link on
the project’ website to his profile is available,
but does not provide useful information.

PRIVATIX
Does the Project have a strong Advisory Board team?
COMMENT:
The Advisory Board presents people whose skills do not mean any particular importance for the Project. Specific forms
of Advisory Board participation in the project are not disclosed. Moreover, the practical experience of members of the
Advisory Board, their skills, and fame can not be verified.
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PRIVATIX
Is this Project being invested by large venture investors or funds focused on blockchain startups?
COMMENT:
At the stage of project analysis, it was not revealed investments from any large funds or other large venture investors.
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PRIVATIX
Are the partners of the Project large and well-known companies?
COMMENT:
At the stage of project analysis, the Company did not announce any large or well-known corporate partners.
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PRIVATIX
INVESTMENT EVALUATION | Popularity 33
Is this Project popular in social networks and thematic communities (Russian)?
405 subscribers
928 subscribers
not available
402 subscribers
not available
1,593 views
1 post karma
7 subscribers
20 subscribers
6 subscribers
504 subscribers

PRIVATIX
Is this Project popular in social networks and thematic communities?
COMMENT:
The number of subscribers in social networks is quite small, which indicates the lack of project marketing.
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PRIVATIX
Is the Project widely discussed in blockchain news resources?
COMMENT:
There are publications about the Project on a number of popular news sources, but there are no detailed reviews of the
Project or detailed reports from rating agencies.
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PRIVATIX
INVESTMENT EVALUATION | Conclusion 36
AVERAGE SCORE OF
2.3
Is it worth to invest in this project?
COMMENT:
Average score of the project = (5 + 3 + 1 + 3 + 1 + 4 + 3 + 2 + 2 + 1 + 3 + 1
+ 3 + 3 + 2 + 1 + 1 + 1 + 3 + 5) / 20 = 2.3
Low level of investment attractiveness.
Low development potential, eventual speculative investments.
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PRIVATIX
20
High level
High probability of investment return,
low sensitivity to market conditions.
Score of 6.1 - 7
RATING SCALE OF INVESTMENT ATTRACTIVENESS
Satisfactory level
Medium-to-high probability of investment
return, considerable sensitivity to market
environment. Score of 5.1 - 6
Satisfactory level
Satisfactory Level – Considerable risk
exposure, high sensitivity to market
conditions. Score of 4.1 - 5
Low level
Low development potential, highly
speculative investments. Score of 2.1 - 4
Low level
High default risk in the short term.
Score of 0 - 2
Low level
In default with little to no prospect for
recovery

FRAUD RATE 38
Advantages:
● The founders of the Project have a core business experience and experience in
business management;
● The Project has a logical Road Map;
Disadvantages:
● There are significant risks to customers and network agents;
● There is no obvious motivation for receiving payments in PRIX;
● The Project did not define the methods of beating the market competitors;
● Incomplete information about project participants and legal structure;
● Lack of a qualified Advisory Board;
● Lack of a financial development plan for the Project;
Fraud Rate
Medium
How do we evaluate the Fraud Rate?
PRIVATIX

PRIVATIX
CONCLUSION
The company will face significant competition in the VPN services market in general, and in the ICO market
in particular, in view of the already implemented successful ICO of Mysterium project with a similar idea and
technology (from the customers’ perspective). Moreover, Tor, Hola, and CENO solutions show that
blockchain is not a necessity for implementing this idea.
The pricing of PRIX tokens also casts doubt on the success of the Project, due to relatively weak and
controversial fundamental value of PRIX, which value can be easily manipulated by large speculators, that
casts doubt on the motivation of Privatix members to receive payments in PRIX tokens.
The refusal of the Project from the usage of Escrow intermediaries raises questions about the transparency,
as well as the understated amount of soft cap.
The technical implementation of Privatix puts into question the security of network customers, because if
clients visit websites that do not support HTTPS, their data can be intercepted by unscrupulous agents.
The Project patent for the technology has not been received yet, as well as the factors that can facilitate its
acquisition. There is no prospect that exit nodes of network agents will not be used for illegal activity, and in
the latter case that agents will be legally protected from criminal prosecution, as well as network users
themselves due to the technical limitations of the solution. In addition, legal risks include the refusal of the
project from the introduction of the KYC procedure and the acceptance of payments from investors from
China, Hong Kong and Singapore, which casts doubt on the legal stability of Privatix.
39
Investments
in this project are
highly risky
and might
not meet investors'
expectations

PRIVATIX
RECOMMENDATIONS
1. To describe the roadmap, from which countries and how the project is
planning to start operating, which contracts and with whom to sign it for the
legal purity of the process;
2. To draw up a financial plan and strategy for the development of the project
under various development scenarios;
3. To identify key competitors and target market niches for successful
competition;
4. To add specialized professionals to the public part of the team;
5. To organize the work of SMM promotion to attract attention to ICO;
6. To provide clear evidence of legal protection for network agents providing
exit nodes in case of misuse of the network;
7. To elaborate an ICO strategy specifying how and under what conditions the
Project will work with citizens and residents of some countries.
40
What can be improved?

CONTACTS 41
+7 (495) 175-1024 (Russia)
+41 21 588 02 23 (Switzerland)
info@digrate.com
digrate.com

Privatix - investment attractiveness report (Digital Rating Agency)

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