Goodbye Munchee: SEC Cyber Unit Shuts Down Another ICO
The Securities Exchange Commission announced that their new cyber unit halted an ICO by Munchee Inc. According to the SEC, “registration concerns” created a need to shut down the ICO. This latest move serves as a landmark enforcement milestone for the unit.
SEC Takes a Bite Out of Munchee
The company sought $15 million USD in startup capital to build a restaurant delivery and review site, with the intent of paying users in tokens for their reviews. The SEC classified Munchee’s tokens as unregistered securities due to their availability on secondary markets, as well as the expectation that their value would increase based on the company’s accomplishments.
The release contained a statement made by SEC Enforcement Division co-director Stephanie Avakian:
“We will continue to scrutinize the market vigilantly for improper offerings that seek to sell securities to the general public without the required registration or exemption … In deciding not to impose a penalty, the Commission recognized that the company stopped the ICO quickly, immediately returned the proceeds before issuing tokens, and cooperated with the investigation.”
A General Warning on ICOs
This Release was followed by a statement on ICOss made later in the day, cautioning investors to carefully consider their involvement in initial coin offering schemes:
“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.
“Investors should understand that to date no initial coin offerings have been registered with the SEC. The SEC also has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies. If any person today tells you otherwise, be especially wary. “
Clearly enforcement on the DAO ruling will only continue to tighten as the ICO market develops, and we can expect greater measures made by companies issuing them to distance themselves from the product class, or otherwise circumvent SEC enforcement.
Is the SEC doing the right thing by shutting down ICOs? Share your thoughts in the comments section
Images via Pixabay, Munchee Inc.