KaratBars International, a company with a history of pyramid scheme accusations, announced plans for an initial coin offering (ICO) of its KaratBank Coin (KBC). The company aims to raise $72 million through the sale of KBC tokens, which it claims are backed by physical gold reserves.
The KaratBank Coin whitepaper describes the token as a cryptocurrency linked to "CashGold," a product the company describes as small gold bars on paper resembling banknotes. Each 10,000 KBC tokens can allegedly be exchanged for 0.1 grams of CashGold. The company website displays images of CashGold as paper slips with a square of gold attached. KaratBars International states that 12 billion KBC tokens will be generated, with prices ranging from $0.01 to $0.05 per token. Affiliates are reportedly required to purchase 1,000 KBC tokens.
Participation in the KaratBank Coin ICO is restricted for citizens and residents of the United States, Canada, China, and Singapore. The company offers no explanation for these restrictions. While ICOs are not illegal in the US or Canada, they are often classified as securities by the US Securities and Exchange Commission (SEC), requiring registration. KaratBars International has faced regulatory scrutiny in the past; Canadian authorities banned the company in 2016 for operating a pyramid scheme. China also maintains strict regulations on ICOs. Singapore has not banned ICOs, but Karatbars International has faced actions from its regulators.