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HomeNewsSEC Shuts Down Protostarr ICO: When the Bodies Hit The Floor

SEC Shuts Down Protostarr ICO: When the Bodies Hit The Floor

Recently, BlockMason published an article about potential SEC regulation of ICOs, explaining the difference between product-use tokens (safe) and investment-tokens (unsafe). Now, it seems the SEC has finally made good on their promise to shut down the sale of tokens that they believe comprise securities, and therefore fall under SEC regulation. The victim of the SEC’s flexing: Protostarr, who closed shop midway through their ICO after federal investigators called CEO Joshua Gilson and asked a few too many questions.

For better or worse, this is the imminent future of ICOs for the Ethereum community. Any token sales that are not carefully vetted, do not offer product-use tokens for actual products, or do not follow the rules for investment tokens that are securities, will be shut down by the SEC. Purchasing such tokens is NOT SAFE, and customers should make sure to carefully research all tokens before buying. While Protostarr has refunded their investors after shutting down, not all companies may be so scrupulous.

While some may cow under the realities of securities law, BlockMason believes this shutdown represents an important opportunity for the Ethereum community. For too long, scam ICOs have robbed community members of their hard-earned ether without delivering a product. When companies receive funds, but don’t deliver on their projects, the entire community suffers and the growth of the ecosystem stagnates. That is why BlockMason has long prepared for the coming token sale event, and developed a product that not only enables a lawful sale of product-use tokens, but also contributes vitally to the development of the Ethereum ecosystem.

In the last several weeks, BlockMason has received much press regarding our upcoming Credit Protocol Token Sale Event, and the availability of that sale to purchasers in the United States. We have taken extensive steps to make our tokens firmly product-use tokens, necessary for the use of Credit Protocol, the use our application Friend in Debt and the development of other applications like GiftChain, which anyone can build atop the Credit Protocol. We have published our legal counsel’s opinion letter, explaining the crucial distinction between product-use tokens and investment tokens in light of US Supreme Court decisions, and why our tokens are not securities. BlockMason is fully prepared to address all legal challenges because we developed our product with ample forethought, and we look forward to proving ourselves at our CP – Friend in Debt token sale product launch.

It’s a brave new world for Ethereum; if you’re a developer, or a pioneer user, it’s time to jump in.

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