Indiegogo, one of the world’s largest crowdfunding platforms, has decided to dial-back its involvement in crypto by canceling the ICO of Fan Controlled Football League (FCFL) over regulatory concerns. This move comes at a time when several U.S-based blockchain projects are being sued for alleged violations of securities law.
Why Did Indigogo Decide to Cancel the Fan Controlled Football League ICO?
MicroVentures, the broker-dealer that handles Indigogo’s ICO fundraisers, explained their rationale in an email message sent to FCFL investors. They reference the changing regulatory climate and promise to return everyone’s investment capital – a sum worth over $5 million.
An excerpt from e-mail reads:
“Thank you for participating in the FCFL pre-sale. If you have been following the crypto and ICO markets for the last 6 months you already know that the regulatory environment has been rapidly changing. The SEC has provided multiple comments regarding security and utility tokens but has not provided formal guidance or a compliant framework on how to conduct these offerings. We are beginning the return process today. You may hear from someone on our team if we need to verify return instructions on how to return your investment capital to you.”
Legal Concerns in the ICO Industry
The ICO industry has been facing a growing list of legal and regulatory challenges. Currently, value tokens are not considered securities, and this means they don’t fall under SEC regulation. However, several lawsuits are challenging this distinction by claiming that the value tokens were marketed and sold as an investment.
Recently, Unikrn, a esports token affiliated with Mark Cuban was sued in a class action lawsuit alleging unregistered sale of securities. A similar case has been made against the Tezos Foundation and its founders, Kathleen and Arthur Breitman.
The Rise of Crypto Security Tokens
Despite its decision to cancel the Fan Controlled Football League ICO, Indigogo is not completely divesting from the blockchain sector. Instead, the firm seems to be re-orienting itself towards more regulatory-compliant forms of crypto financing such as crypto security-tokens.
Unlike, value tokens, security tokens are SEC-regulated investments that fall under U.S financial oversight, making them much easier to work with from a legal perspective.
As part of this reorientation, the Indiegogo platform is hosting an ICO project with the St. Regis Aspen hotel that will offer accredited investors a real-estate backed crypto security token.
Essentially, investors will buy shares in the hotel via digital tokens, and the project aims to raise up to $12 million in financing. This project is made possible through Indigogo’s partnership with MicroVentures, a FINRA-registered broker-dealer.