The Securities and Exchange Commission is probing the ongoing initial coin offering (ICO) launched by Krops, an online marketplace for farm produce led by controversial businessman Joseph Calata.
Calata—whose company Calata Corp. was recently delisted from the Philippine Stock Exchange due to multiple violations of disclosure rules—also chairs Krops.
“SEC is looking into this matter already. We thank the concerned public for bringing this matter to our attention,” SEC chair Teresita Herbosa said in a text message.
Krops is selling 6.4 million tokens, out of which 1.92 million or 30 percent had so far been sold online.
“Putting aside for now the issue of what really is a cryptocurrency, whether a medium of exchange, a security or a commodity, where it becomes an asset subject of a certificate of participation or investment contract offered for sale or being sold in the Philippines, it should first be registered with the SEC prior to such offer or sale,” Herbosa said.
The offering under question is being pitched to investors as the “world’s first agriculture marketplace crypto equity ICO.”
But an official of Calata said: “First of all, Krops is registered in a Hong Kong company so it’s not covered by Philippine SEC.”
Herbosa, however, said that even if registered elsewhere, a company selling securities locally would still have to register those securities at the SEC.
Alfred Reiterer, a representative of small shareholders of delisted Calata, has raised concerns about Krops’ ICO at the SEC.
“By using a company incorporated in Hong Kong but having all employees in the Philippines, Mr. Joseph Calata definitely tries his best to avoid any kind of regulation,” Reiterer said in a recent letter to Herbosa.
ICO is a one way of crowdfunding, a method of fundraising whereby money is sourced from a large number of individuals usually through an online platform.
This method allows investors to access investment opportunities and enables business start-ups and small- and medium-sized enterprises (SMEs) to access a new source of funding through the internet. —WITH A REPORT FROM KARL OCAMPO