San Francisco-based restaurant reviewing app Munchee has been forced to stop its initial coin offering (ICO) and reimburse investors after regulators raised concerns over the company’s tokens not meeting securities regulations. Munchee was looking to obtain $15m to “improve an existing iPhone app centred on restaurant meal reviews and create an “ecosystem” in which Munchee and others would buy and sell goods and services using the tokens,” according to the US Securities and Exchange Commission (SEC).
However, “in the course of the offering, the company and other promoters emphasized that investors could expect that efforts by the company and others would lead to an increase in value of the tokens,” they added. The regulator felt investors were led to believe they would gain a return on their tokens, however, the tokens did not meet the authority’s standards. The company was not fined due to its quick response to the SEC’s requests.
Why It’s Important
Last week PlexCoin’s founders were charged with defrauding investors. This was the first time the SEC’s newly established Cyber Unit filed charges. The regulator issued a statement back in July saying ICOs will be subject to US security laws.
Both cases suggest a serious commitment to ensuring investors are not mis-sold securities, particularly in the ICO space.
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