Hong Kong’s regulator halts initial coin offering, orders Black Cell to return tokens to investors
In the six months since the People’s Bank of China banned ICOs, crypto issuers had flocked to Hong Kong. Now the city’s regulator is calling a halt to the fundraising
Hong Kong’s securities regulator has ordered a company that is raising capital through an initial coin offering to halt the fundraising and return all tokens to investors, an unprecedented move to rein in the runaway market for cryptocurrencies.
The issuer, Hong Kong-based Black Cell, had been promoting the sale of digital tokens called KROPS to investors through its website. It said the ICO proceeds would be used to fund the development of a mobile application, and holders of the tokens would be eligible to redeem equity shares in the firm.
But the Securities and Futures Commission (SFC) said the fundraising exercise may constitute “unauthorised promotional activities and unlicensed regulated activities”.
The size of the ICO and value of tokens to be refunded has not been revealed.
In a notice published on Monday evening, the SFC said the offering would qualify as a “collective investment scheme” that would require the regulator’s approval to sell or market to the general public. Under such a scheme, the tokens would be regarded as “securities” and would therefore legally fall under the SFC’s jurisdiction.