Hong Kong’s SFC Suspends Black Cell Initial Coin Offering

Hong Kong’s main regulatory watchdog for financial services, the Securities and Futures Commission (SFC) has stepped in to stop the initial coin offering (ICO) by Black Cell Technology. The SFC has ordered the company to stop selling the digital currency to Hong Kong buyers.

The SFC did this because it found Black Cell Technology had engaged in unauthorized promotions and carrying out unlicensed activities. Black Cell Technology has been promoting its digital token called KROPS. In response to the SFC’s action, Black Cell has stopped its ICO to Hong Kong buyers and has confirmed that it will repay Hong Kong investors who have made ICO transactions.

KROPS

In a statement, the SFC said

The SFC found that Black Cell had promoted an ICO to sell digital tokens to investors through its website accessible by the Hong Kong public, with the pitch 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

Under Hong Kong regulations, the ICO strategy adopted by Black Cell Technology could be categorized as a Collective Investment Scheme (CIS) which is not good for the ICO. This is because section 103 of the Securities and Futures Ordinance (SFO) of Hong Kong states that it is a legal offense to issue, possess an interest, or even advertise about selling a part of a CIS – unless it has been authorized by the SFC. There is yet another section of the SFO which considers it an offense to perform such a regulated activity unless they are licensed or authorized by the SFC.

Hong Kong Continuing To Crackdown on ICOs

The SFC has also stepped in on other occasions and stopped ICO’s in Hong Kong from taking place but this is the first time that the authority has named the company it took action against.

Black Cell is a business platform that allows users to access multiple food sources worldwide. The company has a mobile app in development which will give users would access to information about supply and demand to help farmers decide on what to plant and buyers on what to buy. The company’s website shows that the ICO is no longer open to citizens in the US, Hong Kong, and other areas that do not encourage ICOs. Black Cell announced that Hong Kong citizens will be refunded by March 29th.

---