PETALING JAYA: The Securities Commission (SC) has shut down an initial coin offering (ICO) in Malaysia and says it will not hesitate to rein in others who try to contravene securities laws.
ICOs are all the rage the world over now, where parties produce white papers detailing their business plans for raising funds via the issuance of new tokens or cryptocurrencies, all purportedly to be built on the blockchain technology.
In this case, Singapore-registered CopyCash Foundation had first indicated its intention to launch an ICO in Malaysia last week.
According to its white paper, CopyCash plans to establish a social trading and investment or “social travesting” platform, based on the Ethereum blockchain with CopyCashCoin (CCC) as a standard Ethereum ERC20 token used as either a subscription or commission token.
“CopyCash will charge customers an affordable annual subscription to access its invaluable social travesting ecosystem and it will charge commissions from profits generated by copytrading.
“CCC, CopyCash’s internal token, is used as a privilege to pay commissions for profits generated by copytrading,” it said.
CopyCash defines copytrading as an automated trade engine based on the signal trading feature, which enables users to receive real-time trading signals from top traders.
Its ICO, which entails a public sale of 30 million CCC tokens, had planned to raise some US$127.2mil (RM510.09mil).
This is based on the ICO rate of one Ether to 300 CCC and an Ether to (US dollar price of) US$1,272.03 (RM5,101.03).
But on Friday, the SC issued a notice saying that there has been an increase in activities by new ICOs to solicit investments in cryptocurrencies from the public at large, including senior citizens, and that it is aware that CopyCash had organised talks and seminars in major cities in Malaysia.
In addition, the regulator intends to call in key officers of CopyCash Foundation to enquire about its activities, including the purported launch of CCC, given that the activities may fall within the remit of securities laws.
Then, yesterday, the SC directed CopyCash Foundation to immediately cease and desist all its proposed activities, including the launch of its ICO today in Malaysia.
In a media release, the regulator said the directive covered all activities as described in or incidental to CopyCash Foundation’s white paper pursuant to the ICO, including any roadshows, seminars or promotional events related to the scheme.
“The directive was issued by the SC after it found that there was a reasonable likelihood that disclosures in CopyCash Foundation’s white paper and representations to potential investors will contravene relevant requirements under securities laws.
“While the SC continues to facilitate use cases of digital assets in the market, it remains vigilant in monitoring ICO schemes, given the heightened risks, and will not hesitate to take action where necessary,” the SC said, adding that it advises investors to be cautious of the risks of fraud and exercise due diligence before participating in ICO schemes.
On another note, CopyCash Foundation CEO Bobby Lieu was reportedly involved in digital currency Kracoin, which was later discovered to be a pyramid scheme.
Kracoin was championed by investment fund company 5 Forces Capital (5FC), where Lieu served as chief operating officer.
In 2015, Lieu represented 5FC to form a strategic partnership with DaoShang (Beijing) Investment for the listing of Kracoin on the New York Digital Currency Exchange. There has not been any further developments since.