It would seem that blockchain incubator Dragonchain was far from sure the Iagon ICO would pass SEC scrutiny in the US.
Dragonchain, originally developed at Disney’s Seattle office in 2015 and 2016 as the Disney Private Blockchain Platform, is a development ecosystem that allows businesses to create and implement their own blockchain based solutions. Alongside the foundation that now oversees its code, stands the DragonFund Incubator, which has struck up partnerships to projects utilising its technology. These affiliates get, according to its Whitepaper, such support as “Direct access to legal, technical, marketing, and economic subject matter experts as partners for advice and support.”
Now, it would seem, it is that legal department that has decided one of the projects that it is backing is highly likely to fall foul of increased scrutiny by US authorities, and has thus halted the ICO associated with Iagon, and has decided to refund all the Ether that has thus far been invested in it.
A statement on Medium from Iagon initially expressed surprise at what was transpiring, saying that:
“dedicated to resolving all issues following this unexpected pause and, although we find it unfortunate that we will not be able to continue forward with the IAGON token sale through Dragonchain, it is our primary concern to keep our contributors and supporters safe and satisfied without hiccups and roadblocks that could potentially be avoided all together.”
The post, from Iagon’s Rose Marie – its Project Lead/Content Director – added:
“In the event that your ETH contribution is sent back to you, we will have an organized pre-sale, through our website (www.iagon.com). Should that be the case, those details will be distributed at a later date. On the other hand, if IAG tokens are to be distributed, we will be transferring the IAG tokens to the contributors, while simultaneously opening access to a sale that will span over a short period of time, of which is still TBD.”
A later follow-up from Dragon chain said:
“The Iagon decision is a continuation of taking action to protect the company and community. It was reached on amicable terms. It should be noted that until a regulatory framework for utility tokens is defined, “compliance” seems to be a moving target to which we will always strive to fulfil our due diligence to not only position ourselves as the Business Blockchain solution, but more importantly, to protect all Dragon holders — always.”
At the time of writing, Iagon’s website is accepting registrations, and saying that it accepts Bitcoin, Ethereum and credit card purchases of its tokens.
While neither post gives details on what’s gone on behind the scenes between the two, Dragonchain’s tone seems to strongly hint that worries about attracting the ire of regulatory bodies overseeing such offerings – namely the Securities and Exchange Commission in the US – as they are still forming policy, is not something Dragonchain wanted to risk.
That is interesting, as Iagon currently has a minimum viable product (MVP) for its mining system – which rewards those who hand over computer processing time to the network – available for users to test. The presence of such a piece of working code should certainly help it bypass Howey Test concerns centring around token utility, though it doesn’t appear to have been enough to sate lawyers on the Dragonchain side. It is, for example, possible that they required more evidence of Iagon’s decentralised apps in operation before they were convinced the SEC wouldn’t come down on top of the offering.
Dragonchain then took to Twitter to clarify exactly what would happen to cryptocurrency already invested in Iagon – which based its offering on creating a decentralised AI processing and data storage platform.
UPDATE: Ethereum received from the Iagon presale will be returned to the wallets from which it was received.
— DRAGONCHAIN (@dragonchaingang) 1 May 2018
The company again followed this up with a strong hint that the decision had been made to avoid a potential conflagration with regulators that could endanger other projects it is associated with.
We are fulfilling our legal due diligence which we are very serious about. The goal in mind is always long term with the vision of positioning ourselves as the enterprise blockchain solution within the industry.
— DRAGONCHAIN (@dragonchaingang) 1 May 2018