Monetary Authority of Singapore Shuts Down Security Token Offering that Did Not Comply with Advertising Restrictions

The Monetary Authority of Singapore (MAS) has shut down a security token offering (STO) for a “regulatory breach.” MAS said the issuer in question failed to comply with advertising restrictions. Specifically, the STOs legal advisors promoted the offering on LinkedIn calling attention to the offering. MAS did not identify the issuer. The STO is a global offering.

MAS noted that it has cautioned initial coin offering (ICO) issuers not to proceed with any security offering unless it is in full compliance of regulation under the Securities and Futures Act (SFA). MAS has published a guide to token offerings to provide guidance on compliant offerings.

Under the SFA, an issuer may offer securities, or security tokens, to accredited investors without registering a prospectus with MAS. This exemption requires adherence to certain conditions – including a ban on advertising.

MAS reminded all digital token issuers that the offer of securities tokens must comply with all applicable securities laws including the requirement to register a prospectus with MAS.  Issuers who intend to rely on the prospectus exemptions under the SFA should note that these exemptions are subject to conditions, including advertising restrictions.

MAS said digital token offerings involve a heightened risk of fraud and are highly speculative. It is difficult to establish the credibility of these offerings, said the regulator.

Lee Boon Ngiap, Assistant Managing Director (Capital Markets), MAS, commented:

“Where an offer is made to the public, a prospectus is required to ensure that investors are provided with all the information to make informed investment decisions. Some offers may be made without a prospectus if they are limited to a restricted group of persons or to those who have the means to look after their own interests. Such offers are subject to strict conditions such as advertising restrictions. MAS will not hesitate to act if issuers contravene the disclosure requirements under the SFA.”