ICO Halted By Hong Kong's Regulator

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Trading Regulator in Hong Kong has clipped the wings of an Initial Coin Offering (ICO) over non compliance with local regulations.

Hong Kong's Securities and Futures Commission (SFC) has halted Black Cell Technology Limited from issuing ICO expressing concern that the marketplace startup had engaged in "potential unauthorized promotional activities and unlicensed regulated activities."

In obeyance of SEC's order, Black Cell has agreed to distribute refunds to investors based in the autonomous Chinese territory.

It has 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).

Black Cell promoted the digital tokens called KROPS as a means of connecting buyers with crop and livestock producers through the website www.mykrops.com.

The SFC found that Black Cell had promoted an ICO to sell digital tokens to investors through its website promising that 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 of Black Cell.

The SFC considers such arrangement may constitute a Collective Investment Scheme (CIS), which under local regulations must be preregistered and authorized.

In January, the Philippines Securities and Exchange Commission (SEC) filed a cease-and-desist order against four companies and Filipino resident Joseph H. Calata for operating Black Cell's ICO.

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