Security and Exchange Commission of Pakistan (SECP) in an official statement on Monday relayed that crowdfunding is not allowed in Pakistan.
The statement came after a Facebook page operated by Innovative Crowd Funding Project Pvt-Ltd Pakistan is explaining the concept, history and other details of crowd funding.
SECP reveals that as per their website, the company seems to be raising funds through crowdfunding. It clarifies further that no company with the name of Innovative Crowd Funding Project Pvt-Ltd is registered and no company in Pakistan can raise funds using this scheme.
In Pakistan fraud is predominately the major reason why such schemes fail on a massive level. Crowdfunding has been used by startups all over the world to kickstart their entrepreneurial journey.
Right now a Pakistani entrepreneur is using this method of garnering funds, for his product (not in Pakistan of course), where he’s offering the best power bank made till date. Like him, many entrepreneurs (especially belonging to tech world) hope to get the necessary funds using this method to get their products take off in the market.
Crowdfunding is the source of funding for many startups and projects and its ban in Pakistan kind of put a damper in the entrepreneurial landscape. But at the same time, it could also be an opportunity to come up with a new scheme that can make gathering funds Fraud Proof.
The statement also read:
“In view of the above, the public is hereby warned not to be misled by fraudulent activities, investments/deposit schemes launched by certain non-corporate entities or individuals through advertising in the electronic and print media, websites, emails, mobile text messages etc.”