Indiegogo cancels first ICO amid regulatory concerns
Indiegogo, a crowdfunding giant, quietly canceled its first initial coin offering (ICO), which raised $5.2 million in December 2017.
Indiegogo initiated the ICO for the Fan-Controlled Football League (FCFL), with a goal of raising funds for the development of an independent football league with a crowd-sourced team management. This was aimed at giving fans control of personnel decisions, logo design and play calling. At the time, FCFL set a $5 million target to achieve this goal.
Eight months down the line and the company had to cancel the initial coin offering. According to The Next Web report, Indiegogo had to cancel the ICO due to regulatory issues. In a message addressed to the investors, MicroVentures, Indiegogo’s token brokerage partner, explained to the investors that they would be refunded their money in full.
According to the message, MicroVentures decided against giving the investors their promised tokens. Due to the fact that the SEC kept making regulatory changes, MicroVentures saw it best to analyze the situation until the environment became stable especially for ICOs, ultimately deciding that the best way out is to cancel the project and give back investors’ money.
“During this time, your investment was not distributed to the company. This was done to ensure that MicroVentures navigated through the regulatory climate prior to finalizing the offering. While we believe the initial path taken was compliant, we have decided the best way to ensure compliance is to unwind the investment opportunity and return investor capital,” the letter read.
In a statement to The Next Web, FCFL CEO Sohrob Faradi claimed MicroVentures started the refunding process without their consent, saying they became aware of the situation when the company informed investors about the botched token sale.
According to FCFL, the company wasn’t given a valid reason as to why the MicroVentures cannot complete the ICO. The move will set back the plans of the startup, which had already signed a two-year contract with Twitch, a streaming service to broadcast games live. FCFL planned to use the surplus money from the offering to pay for this deal.
In a statement to CoinGeek, Indiegogo said, “To clarify, Indiegogo is not a broker dealer. This ICO was conducted through First Democracy VC (joint venture between Indiegogo, an equity crowdfunding platform, and broker-dealer MicroVentures. The ultimate decision to refund was made by the issuer (FCFL) and the broker dealer (MicroVentures).”
It is not yet clear what the future hold for Indiegogo. People are waiting to see whether the company will make future utility token ICOs available. Last week, the company launched its second offering, a security token for a luxury resort in Aspen.
This article has been updated to include the official statement from Indiegogo.
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