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Tuesday, September 17, 2019

SEC halts $15 million ICO after allegations of unregistered securities

By Mark Iandolo | Dec 21, 2017

WASHINGTON (Legal Newsline) — The Securities and Exchange Commission (SEC) announced Dec. 11 that Munchee Inc. has halted its initial coin offering (ICO) after allegations involving unregistered securities offers and sales.

“Our primary focus remains investor protection and making sure that investors are being offered investment opportunities with all the information and disclosures required under the federal securities laws,” said Steven Peikin, co-director of the SEC’s Enforcement Division.

Munchee was selling digital tokens to investors as a way to raise $15 million in capital for a food review service. The company hopes to improve the service app, which involves a potential ecosystem where Munchee and others would buy and sell goods and services by using tokens. The SEC alleges tokens are considered securities.

“We will continue to scrutinize the market vigilantly for improper offerings that seek to sell securities to the general public without the required registration or exemption,” said Stephanie Avakian, co-director of the SEC’s Enforcement Division.  “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.”

Handling the case for the SEC is the Enforcement Division’s cyber unit and complex financial instruments unit, particularly Jeff Leasure, Brent Mitchell and James Murtha. Robert Cohen, Reid Muoio and Valerie Szczepanik supervised the case.

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