Hong Kong’s Securities and Futures Commission (SFC) has halted an initial coin offering (ICO) on the grounds that the issuer was selling securities out of compliance with local regulations.

In a statement released Monday, the SFC said that marketplace startup Black Cell Technology Limited, which sells the "krop" token as a means of connecting buyers with crop and livestock producers, had effectively launched a Collective Investment Scheme (CIS), which under local regulations must be preregistered and authorized.

Black Cell had not registered its scheme, despite selling tokens to fund the development of its mobile platform, according to the announcement.

The SFC said:

The SFC’s action comes some two months after the Philippines Securities and Exchange Commission filed a similar cease-and-desist against Black Cell for selling unregistered securities. At the time, the regulator identified three other affiliated registered companies and local resident Joseph Calata as being associated with the ICO.

While Black Cell appealed the order, a hearing confirmed that krop tokens are unregistered securities as defined in the Philippines. As a result, the cease-and-desist is now permanent.

Hong Kong street image via Shutterstock