The Monetary Authority of Singapore (MAS) announced on Thursday that it has ordered a company to cease proceeding with its initial coin offering (ICO). In its statement, the East Asian regulator did not say to which company it was referring.
But, according to the same statement, the company behind the ICO was planning on using an exemption in Singapore’s Securities and Futures Act which allows a securities issuer to sell only to accredited investors.
This is very much akin to the system used in the US by companies filing a ‘Form D.’ This gives them the right to offer their securities to wealthier members of the public who have to hold a certain number of assets before they can invest.
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No ICO advertising
In the case cited by the MAS on Wednesday, it appears that the company that planned on issuing the ICO advertised the launch via LinkedIn. The Singaporean regulator said that the advert directed LinkedIn users to invest in the ICO.
As a result, the company had failed to meet its part of the exemption clause. By advertising its ICO, it had implied that anyone could invest in it. This, in turn, could lead to non-accredited investors exchanging their cash for the company’s coins and make the exemption redundant.
“Where an offer is made to the public, a prospectus is required to ensure that investors are provided with all the information to make informed investment decisions,” said Lee Boon Ngiap, Assistant Managing Director (Capital Markets), MAS. “Some offers may be made without a prospectus if they are limited to a restricted group of persons or to those who have the means to look after their own interests. Such offers are subject to strict conditions such as advertising restrictions. MAS will not hesitate to act if issuers contravene the disclosure requirements under the SFA.”