Indiegogo, the famous crowdfunding platform, is hosting its first ICO for an asset-backed security token that represents shares in a luxury ski resort in Aspen, Colorado. A move that comes after the company announced its plans to launch an Initial Coin Offering (ICO) platform in December of last year.
On August 23rd Indiegogo began hosting the sale of “Aspen Digital Tokens” on behalf of Aspen Digital Inc allowing investors to buy an indirect fragmented equity ownership stake in the St. Regis Aspen Resort in Aspen Colorado. According to the Indiegogo press release, the token sale aims to raise a minimum of $12 million in security tokens that represent ownership in the “trophy property”.
Unlike the majority of the ICOs which are open to the public, only accredited investors who earn over $200,000 or have a net worth of over one million dollars, will be able to invest in the Aspen Digital ICO, given its status as a security token. Investors will be able purchase “Aspen Digital Tokens” with U.S. dollars, as well as with Bitcoin (BTC) and Ether (ETH). Founder of Indiegogo, Slava Rubin, stated:
"We have always strived to foster innovation and provide our users access to some of the most novel and interesting products and ideas from around the world. With the blockchain revolution fully underway, we at Indiegogo are excited about the world-changing impact and potential of security tokens."
Indiegogo and the Cryptocurrency Market
In December of the last year, Indiegogo announced their plans to enter the ICO space through a partnership with MicroVentures, the only major equity crowdfunding site that is a broker-dealer registered by the Financial Industry Regulatory Authority (FINRA). This move aimed to provide a more legitimate approach to token crowdfunding, ensuring investors that all projects would not only be expertly vetted but also regulatory compliant.
The launch of this ICO service also aims to help entrepreneurs stay on the right side of the U.S. Securities and Exchange Commission (SEC), as stated by Rubin in December:
“If you are an entrepreneur you are definitely not going to jail, and you are definitely doing it right and if you are an investor you know that these companies have been vetted and this is an offering that is completely legitimate”
Since then, Indiegogo has already received hundreds of applications for future ICOs.
The Need for ICO Regulation
Rubin’s concerns are quite real, the SEC has halted numerous ICOs, even arresting certain ICO founders that tried to sell securities to the general public without the required registration or exemption.
The infamous Floyd Mayweather-indorsed ICO, Centra, saw its founders charged with fraud. The two founders, Sohrab Sharma and Robert Farkas, claimed to offer a cryptocurrency debit card backed by Visa and Mastercard, a business relationship which, according to the SEC, didn’t exist. Furthermore, the SEC also claimed that Sharma and Farkas created fake biographies and paid celebrities to endorse the ICO on social media.
AriseBank ICO, which claimed to be first world’s decentralized bank allegedly reportedly raised $600 million in two months. The project was halted by the SEC who subsequently froze the campaign’s assets explaining that AriseBank had “falsely stated that it purchased [a Federal Deposit Insurance Corporation]-insured bank which enabled it to offer customers FDIC-insured accounts”
While the lack of ICO-specific regulation has led to multiple scams in the space, global regulatory bodies have turned their sights on ICOs. The increase scrutiny has led to the rise of self-regulatory bodies such as Global Digital Finance (GDF) who provide legal advice and a code of conduct with the hope of running legally compliant ICOs.