Civil Case (Center) 31902-02-21 Excalibur Online Ltd v. Raphael Ben Arar, Israel Police - part 10

"Q.  Is this a landing page? Yes or no?

1. It's not a landing page."
2. On May 7, 2019, Oren wrote to Rafi in a WhatsApp correspondence (Appendix 52 to Sarel's affidavit) that this was a "big system" and Rafi wrote to Oren that Sarel and Shahar had been working on it for 4 years... 10 percent of their lives from morning to evening have been grinding water." This correspondence indicates that Rafi was aware in real time of the great work invested by Sarel and Shahar, and did not raise a claim that this was only a "landing page."
3. The same is true of the plaintiffs' attempt to rely on a statement by Shahar Radoshinsky, a senior programmer at CyberTrade, in a recorded conversation from which it emerged that CyberTrade's activity was supposedly a fiction, was unsuccessful, since Shahar Radoshinsky was not even summoned to testify about it.

As is well known, a party's refusal to bring evidence in its favor or to bring witnesses required to prove its version establishes a presumption that if it had been brought to testify, it would have acted against it (see, for example: Civil Appeal 55/89 Koppel (Self-Driving) in the Tax Appeal v.  Telcar Company Ltd., IsrSC 44(4) 595)).

106. In addition, the claim that the venture's dependence on the services of the British company was not known to the plaintiffs was proven to be false.

Sarel and Shahar declared in their affidavits (paragraph 93 and paragraph 88 of the affidavit, respectively) that the decision to work with the British company was a joint decision between them and Rafi at the beginning of CyberTrade's journey, and their version was not contradicted.

The details of the monthly costs for the services of the British company in the amount of £6,000 were sent to Rafi as early as September 2014 (Appendix 51 to Sarel's affidavit) and are detailed under the licensing section.  Rafi himself attached this detail of costs to his affidavit (Appendix 1 to Rafi's affidavit), but claimed in his testimony that Sarel and Shahar presented him with a presentation and explained to him that these were monthly expenses in order to obtain licenses.  When asked whether he had attached the presentation, Rafi claimed, "Here she is" (transcript of March 19, 2025, p.  116, question 23), but no presentation was presented, as stated.

107. The representation that the recruitment of customers will be online, when in practice Cybertrade was forced to recruit customers through the "Call Center", is also not a misrepresentation. The initial intention was to recruit customers online and the plaintiffs do not claim otherwise.  The transition to recruitment through the "Call Center" was made at a later stage, due to the circumstances, in view of the costs involved in the continued development.  This is a risk that the parties took when they invested in a start-up company, which included the possibility that the development would not succeed, and that the company would not reach the finished product it had planned, and once the risk was realized, there is no reason to impose liability in this matter on any of the parties.
108. In light of the above, the claim that the plaintiffs were misrepresented as to the nature of the software should be rejected.

Representations with respect to software regulation

109. Another argument raised by the plaintiffs is that Sarel and Shahar made a representation that the venture would operate in a regulatory manner, but in practice they never intended to do so. None of this claim has been proven.
110. The plaintiffs did not present any evidence that they were promised that the venture would operate in a regulatory manner.
111. On the other hand, Sarel testified that there was no intention to operate the venture in a regulatory manner at the outset, and that Rafi was aware and agreed to this. This is because the regulation soon after the establishment of Cybertrade was not realistic, in view of the costs involved (minutes of March 17, 2025, p.  143, paras.  5-7).
112. In support of this, Sarel referred to an email message dated May 12, 2015 that he sent to Rafi (Appendix 7 to Rafi's affidavit together with Exhibit A/B/5) in which he detailed the costs involved in regulating the regulation, which may reach millions of shekels. Rafi did not deny that he had received the email (transcript of March 19, 2025, p.  123, question 15).
113. In addition, a legal opinion was presented that was ordered on this matter (Appendix 53 to Sarel's affidavit), on the basis of which it was decided to wait until the matter was settled and to work without regulation. Rafi confirmed in his testimony that he knew that it had been decided to suspend the regulation.  Thus he said at p.  120, paras.  26-28:

"Don't forget that I was also with money inside and they came up with this idea to bring in external acquirers, and then let's go back to the issue of regulation.  I don't understand these things."

114. Tal Podim, an employee of Cybertrade who was responsible for the interface with the platform that was used to carry out foreign exchange transactions, and who also worked on the new website established by Yaniv, Oren and Rafi (ZET 10), testified that the new website worked in a non-regulatory manner (minutes of March 19, 2025, p. 49, paras.  19-20).  This website was established without the involvement of Sarel and Shahar, and despite this, its founders, including Rafi, chose to work without regulating the issue of regulation.
115. Even when Yaniv and Oren took upon themselves the clearing, they worked in a non-regulatory manner (see Oren's testimony, transcript of March 17, 2025, at p. 117, paras.  8-11).
116. Insofar as we compare the activity of Cybertrade to the activity of Plus500, which is the model that Rafi saw before his eyes, according to him, then as it emerges from the testimony of Sarel (transcript of March 17, 2025, at p. 142, paras.  15-18), which was not concealed, even Plus500 was not regulated at the beginning.
117. From the above, it emerges that Rafi knew in real time the costs involved in regulating the regulation and even knew that Cybertrade does not operate in a regulatory manner. Despite this, he presented no evidence that he complained about it in real time or that he was bothered by it.  The evidence is that even on the new website that he opened, he did not take care to regulate the regulation, which in fact indicates that the issue has now been raised, only in order to create an offset claim against the loan claim.

Representations with respect to the performance and economic results of the joint venture

118. According to the case law, a forecast for the future can be considered fraudulent if it is given by someone who does not believe in its correctness, and if it is based on existing factual data that the presenter knows are incorrect (see A. (Tel Aviv) 28598-01-13 Edwin Tisch v.  Uri Yogev (Nevo, March 13, 2016)).
119. See also the words of the Tel Aviv District Court (Economic Department) in Tel Aviv (Tel Aviv) 9030-10-15 Victor Medina v. Wave Guard Technologies in a Tax Appeal (Nevo, October 23, 2018):

"It therefore remains to examine whether the forecast was made negligently - whether in the context of examining the claim of misrepresentation at the negotiation stage or as a claim regarding a breach of the undertaking included in the investment agreement.