An app for rating US restaurants wanted to raise money by selling Ethereum tokens. For this, an increase in value was promised. But this bill was made without the host.
The US company Munchee wanted to take over 15 million US dollars in the form of bitcoins or ethers through the sale of a new Ethereum-based currency (token) called MUN. The company runs an iOS app for rating US restaurants. The MUN sale was intended to finance the conversion of the app into an “ecosystem”. The buyers of the tokens were promised value. The capital market authority SEC stepped in quickly and stopped the sales.
Because of the explicit prospect of profit, the crypto currency MUN became a security. Munchee had not sought the legally required registration with the SEC. The agency became active immediately when Munchee began selling tokens on October 31st. Already the next day the company had to stop the sales.
By then, about 40 buyers already had bitcoins and ethers worth about $ 60,000. Because Munchee responded promptly and refunded the deposits, the SEC faces a fine. This is clear from the decision issued on Monday (ref. 3-18304). A week before, the SEC had obtained a court order to stop the Initial Coin Offering of PlexCorps.
The business model
Munchee planned to produce 500 million MUN. Of these, 225 million were to be sold as part of the Initial Offering, the remainder remaining with Munchee. Restaurant ratings in the future Munchee app, the operator then wanted to reward with MUN. Restaurants should jump on the bandwagon by accepting MUN as a form of payment and also placing ads in the app. These too would have been payable with MUN.
In addition, Munchee ventured the idea to delete a small part of the MUN with every advertising turnover. That would have slowly reduced the number of tokens in circulation, which, according to the promotional material, could have increased the value of the remaining MUN.
For the initial sale of the tokens, Munchee had already recruited over 300 distribution partners who translated the documents into various languages. After the project had to be canceled, these sellers are now empty.