Hong Kong’s Securities and Futures Commission (SFC) has stopped the initial coin offering (ICO) conducted by Black Cell Technology Limited.
Black Cellpromoted the digital tokens called KROPS. The SFC took regulatory action against the company over concerns that it had engaged in potential unauthorized promotional activities and unlicensed regulated activities.
“ICO issuer Black Cell Technology Limited (Black Cell) has halted its initial coin offering (ICO) to the Hong Kong public and agreed to unwind ICO transactions for Hong Kong investors by returning them the relevant tokens following regulatory action by the Securities and Futures Commission (SFC),” the SFC said in a statement.
In its investigations, the SFC found that the company in its pitch to investors stated that theICO proceeds would be used to fund the development of a mobile application and holders of the tokens would be eligible to redeem equity shares of Black Cell.
“The SFC considers such arrangement may constitute a CIS under the circumstances,” the regulator added. “Where an ICO involves an offer to the Hong Kong public to acquire an interest or participate in a CIS, prior authorization or licensing requirements under the SFO may be triggered unless an exemption applies. An interest in a CIS is regarded as "securities" as defined in the SFO.”
Black Cell has not only halted its ICO, but also undertaken not to devise, set up or market any scheme that constitutes a Collective Investment Scheme (CIS) unless in compliance with the relevant requirements under the Securities and Futures Ordinance (SFO).
