Seattle based Dragonchain is forcing one of its affiliate projects-Norwegian start up lagon to return funds its raised from investors back in April. It is unclear why this has to happen. Lagon even went ahead to publish a Medium post on April 28 when its presale was scheduled to end that the presale had been paused.
This may have not been its idea but the company is said to have joined an incubator backed by Dragonchain-an enterprise blockchain startup spun out of Disney that is said to have brought the hammer down.
Lagon’s CEO Navjit Dhaliwal said that he could not account for the turn of events as the ICO which managed to raise around $1.3 million in ethereum at that time was cancelled. Dhaliwal believes that all these happened due to some sort of regulation. He said the following,
“It is my understanding that Dragonchain is continuing to tread cautiously as the SEC has been investigating all ICO and blockchain projects that arise.”
He continued saying that lagon met Dragonchain on April 30 to get more details but the answer remained indirect. An admin on a Dragonchain Telegram channel went ahead and told members to expect a statement from the Dragonchain CEO about the course of action going forward.
There could be broader problems at play due to the fact that the token sale was part of a program that Dragonchain created after raising around $13.7million in its own ICO around November. Five token issuers including lagon have been incubated by the company so far and pre-sales have not gone well.
Posts on Telegram
Based on some posts that have been made on another Telegram channel, investors in the Look Lateral token presale which ran sometime last year have been asking for refunds due to the fact that the team has not launched its scheduled sales.
Another issuer using the platform Life ID cancelled its presale. All these are indeed indications that there seem to be regulatory uncertainty around crypto tokens as having significant impact on the industry that’s been built around this new way to raise capital.
Several Telegram channel posts indicate that the incubator has been suspended though no official communications have been made.
New rules needed?
As the regulatory air starts to clear, though, some believe this situation will become all more common.
For example TokenSoft founder Mason Borda tweeted that the lagon refund will likely be part of a forthcoming trend whereby ICO issuers that missed a part of the compliance flow would cleaning up.
There seems to be an increasing interest in designing crypto tokens and the sales to fit under existing regulatory rules while others are pushing for a completely different set of rules to be crafted for the industry.