Hong Kong Authority Halts ICO over Regulatory Concerns
The Securities and Futures Commission (SFC) of Hong Kong was forced to halt the KROPS ICO due to regulatory concerns.
ICOs Under Review
In the last couple of months, we have seen many regulatory bodies worldwide warning ICO operators to comply with the appropriate local laws and regulations. The U.S. Securities and Exchange Commission (SEC) has issued many statements regarding ICOs, warning investors and traders about potential pitfalls of investing money in such ventures.
The Chinese government has also been particularly strict with token sales by completely banning them nationwide. The Hong Kong Securities and Futures Commission (SFC) recently published an announcement that it forced Black Cell Technology Limited to halt its initial coin offering (ICO) for its token called KROPS. In the statement, the SFC mentioned that Black Cell wasn’t authorized to conduct the ICO because it constituted a Collective Investment Scheme (CIS). The SFC clearly marked the KROPS token as a security.
Refund to Investors
Since the token sale was advertised, monetized, and offered to Hong Kong residents without complying with the appropriate regulations, the SFC was forced to halt the ICO. The KROPS ICO caught the interest of the Securities and Futures Commission because it offered to give ICO investors equity in Black Cell.
The Hong Kong regulatory authority has also forced Black Cell to refund all investors and to abstain from allowing Hong Kong residents to participate. The SFC also clearly mentions that every company or startup that is planning to conduct an ICO or token sale should seek legal and professional advice in order to fully comply with all the government’s laws and regulations.
Experts believe that such actions from regulators may be necessary in order to help the ICO ecosystem to grow, and, more importantly, to help stop fraudulent token sales from mismanaging or stealing funds from investors.
What are your thoughts on the SFC’s decision to halt the KROPS ICO? Do you think that regulators should stop more ICOs in the future? Let us know in the comments below!
Images courtesy of Wikimedia Commons, YouTube/@KROPS, and Bitcoinist archives.