Calata says SEC has no jurisdiction over ICO

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Calata Chairman Joseph H. Calata shares update on the company’s delisting in a media briefing on Oct. 30, 2017. -- Photo by Arra Francia via Twitter

DESPITE a cease-and-desist order (CDO) issued by the Securities and Exchange Commission (SEC) on his company’s initial coin offering (ICO), businessman Joseph H. Calata insisted this does not prohibit online agribusiness venture Krops from selling digital coins to foreign investors.

In a letter addressed to participants of the ICO, Mr. Calata said it will stop the sale of tokens to Filipinos as per the SEC’s orders, but will continue with the offering for prospective foreign buyers.

“To be clear, we understand that the CDO was just an order to stop the selling of KropCoins only to Filipino nationals. The Philippine SEC cannot prohibit selling to other nationalities because this is not under their jurisdiction. The CDO is also not to stop the operation of the Krops application which serves as the daily virtual agricultural market place of all buyers and sellers of agricultural products,” he said.

Mr. Calata insisted the Philippine SEC has no jurisdiction over Krops’ ICO, “simply because this is a global offering and not a public offering limited to the Philippines.”

The company’s coin offering continues to be held online, with a total of 4.81 million tokens already sold out of the 6.4 million pre-sale tokens as of Jan. 30. The tokens are being sold in exchange for the digital currency called etherium, at a price of 0.0015 ETH apiece.

While Krops will no longer be selling tokens to Filipinos, Mr. Calata clarified that those sold prior to SEC’s CDO will remain a part of the ICO.

The SEC last Jan. 26 had stopped the ICO of Krops, involving three other Calata-led firms: Black Cell Technology, Inc., Black Sands Capital, Inc., and Black Cell Technology, Inc. The country’s corporate regulator said that the companies failed to register the securities being offered in the ICO, making the issuance illegal.

Krops describes itself as an online marketplace for agricultural products with an inventory of P15 billion, making it the “biggest farm in the Philippines and most diverse without owning a single farm.”

Mr. Calata noted that given the absence of regulations pertaining to ICOs, Black Cell Technology sought the SEC’s audience through a letter dated Jan. 18 to iron out regulatory concerns regarding the offering.

“The letter which clearly had the intention of productively threshing out any issues with SEC was simply ignored. It is quite puzzling why the SEC was very arrogantly dismissive, to say the least,” according to Mr. Calata.

The businessman said they are now seeking another dialogue with the SEC to clarify matters regarding the ICO. For one, Mr. Calata said that the SEC has the “erroneous impression and belief that the KropCoin ICO is somehow related to Calata or CalCoins.”

To recall, CalCoins were Mr. Calata’s proposed alternative to shareholders of now delisted agribusiness firm Calata Corp. Mr. Calata, who served as the company’s chairman, gave shareholders the option to exchange their shares for digital tokens that can then be traded in international cryptocurrency exchanges.

With these assumptions, Mr. Calata claimed that the SEC’s CDO has been “nothing but a harassment against me.”

Following the CDO against Calata’s businesses, the SEC said it will be investigating other companies that have launched ICOs in the past without their knowledge. The commission will also be releasing guidelines for ICOs within the year. — Arra B. Francia