The SEC announced yesterday that Munchee Inc. had provided refunds to investors after officials made contact and drew issue with its token sale, which the agency said constituted the offer and sale of unregistered securities.
Munchee Platform is a decentralized blockchain food review social platform. In October and November, Munchee carried out the offering of MUN tokens to raise about $15 million.
According to the report, the SEC argued that the MUN tokens constitute securities because they were investment contracts. The document also notes that the tokens were ultimately deemed a security regardless of their utility when the sale took place.
Even if MUN tokens had a practical use at the time of the offering, it would not preclude the token from being a security. Determining whether a transaction involves a security does not turn on labelling – such as characterizing an ICO as involving a "utility token" – but instead requires an assessment of "the economic realities underlying a transaction".
The SEC order
It is stated that agency first contacted Munchee on the second day of the sale and after that the company did not deliver any tokens to purchasers. The SEC decided not to impose a penalty due to the fact that ICO immediately returned the proceeds and cooperated with the investigation.
Recently, we have reported that the SEC shuts down PlexCorp ICO and files charges against the founder.