In a shift from the focus on alleged scams, the US Securities Exchange Commission (SEC) has shut down Munchee’s ICO. Muchee is a California based company that built a $15 million token sale after registration concerns were raised. This is seen as the beginning of a volley of ICO failures.
On 11th Dec, the SEC announced that the company had refunded the investors after the order from the SEC. The ICO aimed to fund the MUN coin which is a payment system for restaurants.
Why did SEC shut down Munchee?
The reason is because of Munchee’s reckless and unwarranted claims of great returns that deceived investors.
The SEC termed Munchee’s claims as “untrue” and “misleading.”
The SEC found out that Munchee was releasing a security which was camouflaged as a utility. This meant that the company believed that the MUN token would be used within the Munchee ecosystem and not to fund operations.
SEC’s concern was simple. The Munchee tokens were securities and therefore they needed to comply with U.S securities laws. However, they did not. Munchee neither qualified for an exemption nor did they register its securities. Due to this, the tokens they were offering have been considered illegal.
The SEC forced the company to stop the ICO immediately and to cooperate with the investigation which is being conducted by the Enforcement Division’s Cyber Unit and Complex Finance Instruments Unit.
Will this be the beginning of the end for other similar ‘Munchee’s’? We shall have to wait and see. The issue here though is that the next Munchee might decide not to go down easily and fight the SEC instead.