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MAS halts ICO over public LinkedIn advertisement

Regulator says issuer did not comply with requirements to get prospectus exemption under Securities and Futures Act

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The Monetary Authority of Singapore (MAS) has stopped an unnamed initial coin offering (ICO) issuer from proceeding with its securities token offering in Singapore, saying it did not comply with regulatory requirements to get an prospectus exemption under the Securities and Futures Act (SFA) when it openly advertised the ICO issuance via LinkedIn.

Singapore

THE Monetary Authority of Singapore (MAS) has stopped an unnamed initial coin offering (ICO) issuer from proceeding with its securities token offering in Singapore, saying it did not comply with regulatory requirements to get an prospectus exemption under the Securities and Futures Act (SFA) when it openly advertised the ICO issuance via LinkedIn.

Without identifying the ICO issuer, MAS said on Thursday the issuer had planned to rely on an exemption under the SFA, which allows an issuer to make an offer of securities to accredited investors without registering a prospectus with MAS.

But MAS said the exemption from prospectus registration is subject to conditions, including a requirement not to advertise the offer.

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"The issuer in this case failed to comply with the advertising restriction when its legal advisers put out a LinkedIn post accessible to the public calling attention to the offer. As such, the issuer would not be able to rely on the exemption from prospectus registration," said MAS.

"Following MAS' warning, the issuer has suspended its global offering of securities tokens."

In a press statement, Lee Boon Ngiap, assistant managing director (capital markets), MAS, said some offers may be made without a prospectus if they are limited to a restricted group of persons or to those who have "the means to look after their own interests".

Once an offer is made to the public, a prospectus is required to ensure that investors are provided with all the information to make informed investment decisions, said Mr Lee.

MAS reiterated that with digital token offerings, the risks include a highly speculative valuation, heightened risk of fraud and lack of a proven track record.

"This makes it difficult for investors to establish the credibility of the offerings," it said. "MAS reminds consumers to understand the benefits and risks of any product or service before committing to an investment."

In May last year, MAS warned eight digital token exchanges in Singapore not to allow trading in digital tokens that are securities or futures contracts without MAS' authorisation.

It also warned an ICO issuer to stop the offering of its digital tokens in Singapore. The again-unidentified ICO issuer wanted to sell tokens that would have represented equity ownership in a company, by MAS' interpretation. The structure in this case meant the token should be deemed securities, which are regulated under the SFA.