The Cybersecurity department of SEC has hit the ground running. Within a space of two weeks, the SEC has dissolved another non Conforming ICO scheme. Some weeks ago it was reported that the SEC had given emergency orders for the freezing of assets of the Founders of Plexcoin due to alleged corrupt practices. Just when the ICO ecosystem was trying to digest the Plexcoin saga fully, Sec has clampdown another ICO project known as Munchee.
Munchee In Brief
These are tough times indeed for companies thinking of organizing ICO projects in the U.S because SEC is fully alert and ready to pounce on any ICO that runs afoul of its statutes. The latest ICO to face the SEC trouble is Munchee ICO.
Munchee- a Blockchain based food review platform. Users of the Munchee app can use it to satisfy their food cravings by scrolling through an array of delicious dishes served at nearby restaurants. The platform’s primary aim is not to review restaurants; instead, it focuses on the quality of food being served. Munchee lets its users see the most popular dishes in their locations.
Munchee Goes Under The SEC Hammer
For the lovers of Munchee, it is important to note that the Munchee issue is not a case of fraudulent or corrupt practices like the Plexcoin scenario.
The United States Securities and Exchange Commission has intervened and served a cease and desist order to the Munchee ICO saying the Munchee project is an unregistered security.
The Munchee ICO was organized to raise $15 million through the sale of MUN tokens, which will allow the founders of Munchee to take the project to a higher level. Some parts of the SEC cease order, which can be found here, reads thus:
“Even if MUN tokens had a practical use at the time of the offering, it would not preclude the token from being a security. Determining whether a transaction involves a security does not turn on labeling such as characterizing an ICO as involving a ‘utility token’- but instead requires an assessment of the realities underlying a transaction.”
The SEC has declared that it will not impose penalties on the Munchee founders since they have quickly canceled the ICO project and promptly refunded all investors in the project. The co-director of SEC, Stephanie Avakian said:
“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.”
It remains to be seen how many more ICO projects would be brought down by the SEC, going forward. Some are of the opinion that this new regulation of the ICO space is in the best interest of investors since a lot of bad actors have emerged in the ICO ecosystem in recent times.