New Zealand regulators have stepped in to warn investors not to participate in an ICO by online marketplace Sell My Good. The local startup had hoped to raise NZD$220million, around USD$150million, by offering its “SMG Cash” token but the Financial Market Authority (FMA) claimed that their concerns “had not received a satisfactory response” from teenage CEO Ashutoush Sharma.
These concerns likely centred around claims made in the ICO’s white paper which boasted of 5 million users and 10,000 new sales listings a day. An investigation by the New Zealand Herald suggested that these numbers were wildly inflated, with traffic estimated to be 1/10,000th of that claimed by Sharma and the site only listing 400 products in total.
Regulators were able to intervene after their statement last month that any cryptocurrency or ICO token would be considered as a security, and so SMG Cash came under their jurisdiction. In a statement they explained that:
All tokens or cryptocurrencies are securities under the [Financial Markets Conduct Act 2013] – even those that are not financial products. A security is any arrangement or facility that has, or is intended to have, the effect of a person making an investment or managing a financial risk.
The ICO has now been withdrawn. Ashutosh Sharma said that he and his COO had “learnt a tremendous amount” from the experience.