The chief executive officer of Calgary-based technology startup Imaginea AI is attempting to quell regulatory and investor concerns that widespread plagiarism in its marketing materials may have misled potential buyers about its planned $30-million cryptocurrency offering.
Imaginea CEO Nav Dhunay said in an interview Tuesday that an official from the Alberta Securities Commission had expressed concerns to him after The Globe and Mail reported last week that at least nine passages of Imaginea AI’s “white paper,” which describes the business and technology to potential investors, had been lifted almost word-for-word from a white paper published last year by an Estonia-based firm called Neuromation.
The company, which has scheduled a launch event for its initial coin offering on Wednesday, is urging the provincial securities regulator to look past the incident. Mr. Dhunay blamed it on outside contractors who have since been fired. Imaginea is seeking an exemption by the ASC from traditional rules governing securities offerings as part of a regulatory program aimed at promoting fintech innovation, but has yet to receive it.
“Don’t let all this kill what we’re trying to create,’” Mr. Dhunay said Tuesday, referring to his conversation with the regulatory official.
A spokeswoman for the ASC declined to comment. The Imaginea plagiarism revelation comes amid widespread concerns about cryptocurrencies, which are largely unregulated and have been fraught with cases of fraud.
Initial coin offerings, or ICOs, allow companies to finance a new venture. Companies that issue cryptocurrencies typically outline their business plans in a white paper, which is intended to entice potential investors.
“As soon as this was brought to our attention, we removed the whitepaper from our website and carried out an extensive and comprehensive audit of its content to track any and all third-party source material,” Mr. Dhunay wrote in a letter Friday to investors. The letter was later obtained by The Globe and Mail.
A version of Imaginea’s white paper with numerous lifted passages of text as well as graphics remained posted on the company’s website as late as last Friday morning. It was removed and a revised version was posted on Monday.
Neuromation’s artificial intelligence technology is similar to that being developed by Imaginea, Mr. Dhunay said. He said he found out that there had been problems with its initial white paper about a month ago, but did not learn right away that Neuromation’s document was the source material.
However, he acknowledged that failing to immediately remove the offending document was a mistake. “I took it seriously, but probably not seriously enough, because I just didn’t have more information about the [Neuromation white paper] itself,” he said.
Mr. Dhunay said he has been in touch with his counterpart at Neuromation, Yashar Behzadi, to tell him that the plagiarized sections have been scrubbed from the newest version of the document. He said he also expressed to Mr. Behzadi that he was impressed with Neuromation’s artificial intelligence platform.
“As I read it, it made a lot of sense to me, and I was like, ‘This is exactly what I want to build,’ not knowing that it was Neuromation. And I told him, ‘Yashar, if I had known that you guys were around, maybe we could figure out how we could work together,’” Mr. Dhunay said. “So that’s where our discussions now are.”
Mr. Behzadi confirmed that Mr. Dhunay had made the commitment to remove all plagiarised material. “Although I appreciate his current efforts in dealing with the identified issue, I question the underlying ethics of the initial decision to replicate significant sections of our white paper,” he said in an email. “We take this issue seriously as it directly impacts our company and negatively impacts the external perception of the broader ICO space.”
He said Neuromation reserves the right to pursue all legal options, but he did not elaborate. “It’s a developing situation,” Mr. Behzadi said.
Imaginea AI was co-founded by environmental and energy entrepreneur Suzanne West, who died in March. It is looking to raise $30-million by selling the digital tokens, with proceeds aimed at funding the development of its technology. The technology would be used in sensors for the energy industry.