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A Calgary-based technology startup has pulled the marketing materials for a planned cryptocurrency offering after it was discovered that large sections were copied wholesale from another firm’s documents.

Imaginea AI, co-founded by Suzanne West, a respected environmental and energy entrepreneur who died in March, plans to raise $30-million in a regulated initial token offering, with proceeds aimed at funding development of artificial intelligence technology.

The plagiarism, which the company’s chief executive blames on outside contractors, raises credibility concerns ahead of a launch event scheduled for next week. The materials remained on Imaginea’s website for weeks after the chief executive said he found out about it and the company continued to register investors until June 30.

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At least nine sections of Imaginea AI’s “white paper,” which describes the business and technology to would-be investors, were nearly identical to those in another white paper published last year by a company called Neuromation. The Tallinn, Estonia,-based AI developer raised US$50-million in a token offering that closed in February. An initial coin or token offering is a process where companies finance a new venture by selling digital tokens or coins.

Imaginea says it is building a digital platform offering businesses access to “scalable” AI technologies, and is working with the Alberta and Ontario securities commissions to get regulatory approval for the offering. It published its paper on June 6. The document was removed from its website after an inquiry by The Globe and Mail on Thursday, and was replaced with a note saying it is being updated.

EXAMPLES OF COPIED MATERIAL

FROM NEUROMATION BY IMAGINEA

Neuromation (published October 2017)

Imaginea

(published June 2018, updated July 2018)

Note: both sites as of 2 p.m. EDT, July 5, 2018

CARRIE COCKBURN/THE GLOBE AND MAIL,

SOURCES: NEUROMATION; IMAGINEA

EXAMPLES OF COPIED MATERIAL

FROM NEUROMATION BY IMAGINEA

Neuromation (published October 2017)

Imaginea

(published June 2018, updated July 2018)

Note: both sites as of 2 p.m. EDT, July 5, 2018

CARRIE COCKBURN/THE GLOBE AND MAIL,

SOURCES: NEUROMATION; IMAGINEA

EXAMPLES OF COPIED MATERIAL FROM NEUROMATION BY IMAGINEA

Neuromation (published October 2017)

Imaginea

(published June 2018, updated July 2018)

Note: both sites as of 2 p.m. EDT, July 5, 2018

CARRIE COCKBURN/THE GLOBE AND MAIL, SOURCES: NEUROMATION; IMAGINEA

The plagiarism and questions about the company’s disclosure practices come at a time when regulators around the world are grappling with growing concerns that cryptocurrency companies are using fraudulent tactics to lure investors.

Imaginea CEO Nav Dhunay said he became aware of copied passages a month ago, but stressed the company’s staff were not responsible. Mr. Dhunay said advisers that the company had hired lifted Neuromation’s materials unbeknownst to Imaginea’s senior management. Imaginea had brought in the outside help because it was new to the cryptocurrency world and needed the expertise, he said.

“Along the way, it looks like we picked up some people that have just taken information and just fed it to us. And so we made hard decisions, and we’ve actually parted ways with many of them,” said Mr. Dhunay, who has headed up the company since Ms. West died in March of brain cancer.

She had gained an international following with her ideas to transform the oil and gas sector by employing advanced environmental and digital technology. Working with Mr. Dhunay, Ms. West established the current version of the company as a technology incubator after leaving oil and gas producer Imaginea Energy in a split with her U.S. private-equity backer.

Asked why Imaginea did not take down its white paper, rewrite it and inform securities regulators when the plagiarism first came to light, Mr. Dhunay said the company did make updates to the document.

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“What we’re presenting to the OSC isn’t the white paper. They actually don’t care about the white paper. It’s more of a marketing material,” he said. Instead, the company has filed an offering memorandum with the regulators, which is a different document outlining the business plan, he said.

A white paper is written in an academic style and is intended to entice potential investors to an initial coin offering. The company then creates a digital token and sells it to investors, who typically pay with another cryptocurrency, such as bitcoin or ether.

Some regulators have argued that many of the token sales resemble share sales such as those in an initial public offering, or IPO, and that selling the tokens without a prospectus violates securities laws. But to allow innovation to flourish in the nascent cryptocurrency sector, Canadian regulators have allowed financial technology startups to apply for an exemption from many of the rules that govern traditional securities offerings.

In this case, Imaginea has applied to the Alberta Securities Commission to be exempted but has yet to receive approval. ASC spokeswoman Hilary McMeekin declined to comment on the white paper’s contents.

Joseph Weinberg of Shyft Network, a company that verifies people’s identities using a blockchain-based system, said that stealing content of another white paper is “dangerous in many ways.”

“It misrepresents the quality of the work, the competence of the team behind the proposed white paper and the project itself,” Mr. Weinberg wrote in an e-mail. “More importantly, potential investors could be misled.”

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Mr. Dhunay declined to name those he called “bad actors,” saying only that Calgary-based individuals had introduced Imaginea to international advisers. However, he noted that a revised version of the white paper posted Thursday, before the company later removed it, had no longer listed some names as being involved in the project. The names dropped from the document were Samson Lee, chief crypto-economic adviser; Floyd DCosta, blockchain technology adviser; Anish Mohammed, architecture and security adviser; and Dr. Vassil Dimitrov, mathematical and computational adviser.

The Globe sought comment from the four, but only Mr. Mohammed responded, saying he was involved only as a colleague of Mr. Lee.

For its part, Neuromation said it is examining its options. “Our legal department is looking into Imaginea AI [white paper] and other communication materials to evaluate the amount of copied proprietary intellectual assets and identify further legal actions,” spokeswoman Esther Katz said.

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