California-based Munchee Inc. halted its initial coin offering and refunded the proceeds after the SEC found that its conduct constituted unregistered securities offers and sales.
The company wanted to raise $15 million in capital for its blockchain-based food review service. Munchee wanted to improve an iPhone app centered on restaurant meal reviews and build an "ecosystem" in which goods and services can be bought and sold using tokens.
The company said it would eventually pay users in tokens to write food reviews and sell advertising to restaurants and "in-app" purchases to app users in exchange for tokens. The company and other promoters assured investors that the value of tokens would increase and steps would be taken to set up and support a secondary market for the tokens. These actions and other company activities would have led investors to believe that their investment in tokens could generate a return.
Munchee consented to the SEC's cease and desist order without admitting or denying the findings.
"In deciding not to impose a penalty, the Commission recognized that the company stopped the [initial coin offering] quickly, immediately returned the proceeds before issuing tokens, and cooperated with the investigation." Stephanie Avakian, co-director of the SEC's Enforcement Division, said.
