SEC shuts down Munchee ICO
In what needs to be an fascinating starting to the approaching avalanche of ICO failures, the SEC has come down exhausting on Munchee an organization that constructed a $ 15 million token sale. The SEC chairman lately famous that coin choices are, actually, securities and that pre-sale contributors should be registered with the SEC.
Throughout the SECs finds that they famous that Munchee touted itself as a “utility” token which signifies that the corporate acknowledged the MUN token could be primarily used inside the Munchee ecosystem and never be used to fund operations. Nonetheless, due to an utility of the Howey Test (a Supreme Courtroom discovering that basically states that any instrument with the expectation of return is an funding automobile), the SEC discovered the Munchee was truly releasing a safety masquerading as a utility.
“Munchee offered MUN tokens in order to raise capital to build a profitable enterprise,” learn the SEC discover. “Munchee said that it would use the offering proceeds to run its business, including hiring people to develop its product, promoting the Munchee App, and ensuring the smooth operation of the MUN token ecosystem. ‘”
The stickiest half? Munchee claimed that its cash would improve in worth due to a convoluted technique of progress.
“In the MUN White Paper, on the Munchee Website and elsewhere, Munchee and its agents further embarked that the company would run its business in ways that would cause MUN tokens to rise in value. First, Munchee described a ‘tier’ plan in which the amount it would pay for a Munchee App review would depend on the amount of the author’s holdings of MUN tokens. For example, a “Diamond Stage” holder having at least 300 MUN tokens would have paid more for a review than a “Gold Stage” holder having only 200 MUN tokens. Also, Munchee said it could or would “burn” MUN tokens in the future when restaurants pay for advertising with MUN tokens, thereby taking MUN tokens out of circulation, “wrote the SEC.
The ultimate nail?
Munchee printed a weblog publish on October 30, 2017 that was titled “7 Reasons You Need To Join The Munchee Token Generation Event.” Purpose four listed on the publish was “As more users get on the platform, the more valuable your MUN tokens will become “after which went on to explain how MUN purchasers might” watch  their value increase over time “and will rely on the” burning “of MUN tokens to lift the worth of remaining MUN tokens.
Briefly, Munchee was undone by two issues: relying on the token sale as a automobile to lift money for operations and utilizing the usually spammy and scammy advertising and marketing efforts most ICO floggers use now, techniques taken straight from online marketing handbooks. Till token gross sales go away the Web ghetto and refuse to make use of get-rich-quick techniques and inspection tablet advertising and marketing ploys, an increasing number of of those ridiculous gross sales wins will finish in failure. Luckily, Munchee was in a position to return all $ 15 million to the 40 traders that dumped their cash into scheme.
I attempted to contact Munchee by way of their web site however, like their ICO, that function is shut down.