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Munchee Forced to Eat Humble Pie

SEC jump in to halt ICO over registration concerns

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A California-based company has stopped its Initial Coin Offering (ICO) and returned all investment to date after the US Securities and Exchange Commission (SEC) stepped in to raise concerns over the proposed usage of the company’s ICO funds.

Munchee Forced to Eat Humble Pie

Munchee, an app focusing on food reviews, had hoped to create the MUN coin. The coin would have acted as payment for written reviews, but the SEC issued a cease and desist order, which Munchee immediately complied with. According to the SEC press release, Munchee’s immediate compliance, combined with the fact that no tokens had yet been issued, had contributed to their decision not to impose a financial penalty.

The company had hoped to raise $15 million for what they claimed was a utility. But an SEC finding decided that they were actually offering a security, and were thus on the wrong side of the law as they are not registered with the SEC. They established this by using the Howey test – a Supreme Court-created test to determine if certain transactions should be classified as investment contracts. The findings concluded that they were, partly on the basis that Munchee claimed that their coins would increase in value.

Since the SEC intervention, the ICO site and the company website have been taken offline. Munchee are yet to publicly comment on the situation.

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