Indiegogo, a crowdfunding company has set up a service aimed at vetting companies that intend to launch ICOs in a bid to shore up their reputation and acceptability to investors. The move has become necessary due to the sheer numbers of Initial Coin Offerings being launched and concerns that have been raised on their legitimacy.
Despite the popularity of ICOs, there have been questions on modalities and sets of rules to which the popular crowdfunding must adhere to ensure that it operates within the ambits of the law. These issues have arisen because agencies charged with regulation of crowdfunding and venture capital sourcing have expressed concern about the legitimacy of an unregulated ecosystem having access to investors funds.
The US Securities and Exchange Commission has been unequivocal in pointing out that ICO, the crowdsale that relies on digital currencies such as bitcoin and ether may be securities. In China, the government banned ICO ostensibly due to uncertainties about what influence it may have on the economy.
To avoid having problems with regulators in countries that have banned or expressed reservations about ICOs, companies are now selective in their choice of participating investors. The Bermuda based Horizon Telecommunications whose Initial Coin Offering is poised for launch in January, for instance, has planned to exclude Americans from their campaign despite being one of the ICOs mooted as having good prospects for 2018.
Speaking on the issue, the company president, Mr. Gilbert Darrell said, “I’ve made a decision and as much as it pains me to do so we are absolutely barring any American investors from coming into Horizon. We needed to make this very apparent on the white paper and website; absolutely no American investors. If we find they are American we will immediately return their investment and invalidate their tokens”.
All these issues arose because of the novel nature of ICOs and the grey area it is as far as the law is concerned. The Horizon team may have avoided a confrontation with SEC by the exclusion of Americans. Not many ICO teams are knowledgeable enough to have known the intricacies of the SEC’s jurisdictions and when they may have been crossed. Weeks ago, the Munchee ICO was halted by SEC for breaching securities law and were ordered to refund investor funds.
Issues such as this are the reason lndiegogo, a crowdfunding company has partnered with MicroVentures to launch an Initial Coin Offering for a platform that would ensure that companies planning on launching ICOs do not run foul of Securities laws through the adoption of best practices within the industry. Mr. Slava Rubin, the Indiegogo founder said that the company has already received hundreds of applications from companies hoping to launch ICOs in 2018. He said that the partnership with MicroVentures which is registered with Financial Industry Regulatory Authority is of the essence in the bid to ensure seamless and issueless service delivery of ICO related services to clients.
He was confident that the service is law compliant that no client would have issues with the law and that investor funds are secured through vetting of companies and their ICOs. This has become necessary because the distributed ledger technology has raised issues of misuse and misapplication among policymakers regarding possible criminal utilization of the technology as a tool to launder money or anonymously move drug funds.