Liability for Information Given in White Papers under MiCA

The liability provisions of Articles 15, 26 and 52 MiCA relate to the content of crypto-asset white papers (see here to read about the content of a crypto-asset white paper) and govern the legal responsibilities of market participants in the field of crypto-assets. The contents of these liability provisions are essentially identical and follow the same structure. Furthermore, these liability regimes relate to the information contained in a white paper (similar to the prospectus liability regime). It is important to be attentive and seek expert advice when preparing a white paper for a crypto-asset to minimize the risk of liability.

Liability for the Information Given in a Crypto-Asset White Paper

Article 15 MiCA deals with liability for the information given in white papers involving crypto-assets other than asset-referenced tokens and e-money tokens. The provision applies to the authors of crypto-asset white papers, namely offerors, persons seeking admission to trading and operators of trading platforms, as well as to the respective members of their administrative, management or supervisory bodies. It essentially holds these persons responsible for the accuracy and completeness of the information given crypto-asset white papers, including information provided in subsequent amendments pursuant to Article 12 MiCA. If information in a crypto-asset white paper (or modified crypto-asset white paper) is given that is not complete, fair or clear or is misleading, the liability provision of Art 15 MiCA may apply. Liability claims based on national laws are not affected by this liability regime.

Under Article 15 MiCA, holders of the crypto-asset can hold the author(s) (as well as the members of their administrative, management or supervisory bodies) liable for any loss incurred due to an infringement of the information requirement. Any contractual exclusion or limitation of civil liability is void. However, the holder is required to present evidence of the infringement and show that reliance on the infringing information had an impact on the holder's decision to purchase, sell or exchange the crypto-asset. 

Article 15 (5) provides a carve out for liability related to information provided in the summary of a crypto-asset white paper. Authors shall not be liable for the information provided in the summary unless:

• the summary is misleading, inaccurate or inconsistent when read together with other parts of the crypto-asset white paper; or
• the summary does not provide key information in order to aid prospective holders of the crypto-asset when considering whether to purchase the crypto-asset.

Liability in Connection with Asset-Referenced Tokens and E-Money Tokens

Because issuers of asset-referenced tokens and e-money tokens must comply with specific rules adapted to each category, Articles 26 and 52 MiCA contains liability provisions for information given crypto-asset white papers for asset-referenced tokens and e-money tokens, respectively. The content and form requirements of a white paper for the issuance of asset-referenced tokens are set out in Article 19 MiCA. The requirements for the information given in a white paper for the issuance of e-money tokens are set out in Art 51 MiCA. 

Issuers, as well as the members of its administrative, management or supervisory bodies, are liable to a holder of asset-referenced-tokens or e-money tokens for damages if they infringe these specific rules by providing information in the respective crypto-asset white paper (or modified white paper) that is not complete, fair or clear, or that is misleading. However, they are not liable for the information given in the white paper summary with the same exceptions as in Art 15 MiCA (see above). Similarly, exclusions of civil liability have no legal effect. 

However, holders of asset-referenced tokens or e-money tokens may only claim damages from the issuer (or its respective bodies) if they provide evidence that the issuer infringed Art 19 or 51 MiCA by providing in the white paper information that is not complete, fair or clear, or that is misleading. In addition, the holder has to prove that such infringing information had an impact on its decision to purchase, sell or exchange the asset-referenced token or e-money token.

Conclusion

MiCA brings new regulations for companies in the crypto-asset space, particularly about the publication of white papers. Issuers are liable if they provide incomplete, unfair or unclear, or misleading information in a crypto-asset white paper. However, a holder has the burden to prove that they relied on such information and that it had an impact on their decision to purchase, sell or exchange the crypto-asset. To mitigate liability risk, issuers should know what a crypto-asset white paper must contain and take the following measures:

• Provide clear and accurate information: issuers should ensure that they have all relevant information about the proposed crypto-asset project.
• Do not make misleading statements: The crypto-asset white paper must not contain misleading or false statements. All information should be accurate, transparent, and not misleading for potential investors.
• Update the white paper: Offerors and issuers have to modify their published white paper whenever there is a significant new factor, material mistake or material inaccuracy that is capable of affecting the assessment of the crypto-asset. If they do not modify the information given in a crypto-asset white paper, it is incomplete and can lead to liability claims. Therefore, it is important to be aware of relevant changes in the crypto-asset project and regularly update the crypto-asset white paper.
• Hire an external expert: To ensure that the crypto-asset white paper complies with legal requirements and does not pose any liability risks, it is useful to have it prepared by external experts. They can identify possible deficiencies or violations and make recommendations for improvement.