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Investment Cancellation & Regulatory Refund Protocols ​

Unlike standard e-commerce returns, cancelling an investment in Regulated RWA is a legal event governed by securities law. "Refunds" are technically classified as either Rights of Rescission (investor-initiated) or Escrow Releases (system-mandated).

This document outlines the compliance framework—specifically SEC Rule 15c2-4 and MiCA—that dictates how and when funds must be returned to investor.

1. The "No-Touch" Rule (Custody & Escrow) ​

To protect investors from fraud, we strictly adhere to the "Contingency Offering" standards set by the SEC.

SEC Rule 15c2-4 (The Escrow Mandate) ​

This rule prohibits an issuer (the company selling the token) from touching investor's money until specific conditions are met (e.g., raising the full $5M target).

  • Requirement: Investor's funds are held in a neutral "Safety Zone"—either a bank escrow for fiat or a Smart Contract Vault for crypto.

  • Protection: If the offering is cancelled or fails to close, the issuer has no ability to block investor's refund. The return of funds is a legal obligation executed by the third-party custodian or the code itself.

Smart Escrow (Programmatic Enforcement) ​

For on-chain payments (USDC/USDT), we utilize Smart Escrow Contracts.

  • Technological Compliance: The smart contract hard-codes the logic of Rule 15c2-4.

  • Mechanism: If the "Soft Cap" is not reached by the deadline, the contract state automatically flips to refund mode. This allows investor to withdraw funds immediately without waiting for human administrator approval, ensuring a "Trustless" guarantee of fund safety.

2. Investor Rights of Rescission (Voluntary Cancellation) ​

Before an investment is legally finalized ("Closed"), investor generally have the right to withdraw investor's commitment. The specific window depends on the regulatory framework of the deal:

Regulation A+ (The "Cooling Off" Period) ​

  • The Rule: Under SEC Regulation A, the platform acts as an intermediary. While not always a strict statutory requirement like Reg CF, our Subscription Agreements grant a contractual right to rescind investor's offer at any point prior to the official closing notice.

  • Process: When investor click "Cancel Investment," the system legally voids investor's Subscription Agreement and triggers the escrow release.

EU Consumer Rights (MiCA) ​

  • The Rule: For EU investors purchasing crypto-assets, MiCA (Markets in Crypto-Assets) and the Consumer Rights Directive generally provide a "Right of Withdrawal" (typically 14 days) for distance contracts, unless explicitly waived upon immediate delivery of the asset.

  • Process: Our system checks investor's jurisdiction. If investors are an EU resident, the "Cancel" button remains active for the statutory period unless investor have already received and traded the tokens.

3. Mandatory System-Triggered Refunds ​

In certain compliance scenarios, the system must force a refund to remain legal.

A. Failure to Raise (Contingency Triggers) ​

  • Regulation: SEC Rule 10b-9 (Representation of "All-or-None" or "Part-or-None" offerings).

  • The Trigger: If the offering states "We must raise $1M by Dec 31" and fails to do so, the offering becomes void.

  • Action: The system executes a Batch Refund. All commitments are cancelled, and funds are returned. Keeping funds past this date would constitute fraud under the Securities Exchange Act.

B. Material Changes (The Reconfirmation Rule) ​

  • Regulation: SEC Regulation A / D (Disclosure Requirements).

  • The Trigger: If a "Material Change" occurs (e.g., the issuer loses a key license or changes the token price), previous investment commitments are rendered invalid because the "deal" has changed.

  • Action: Investor will receive a "Material Change Notification." If investors do not affirmatively click "Reconfirm" within the legal window (typically 5 business days), the system automatically initiates a refund.

4. The Settlement Mechanism (Anti-Money Laundering) ​

Returning funds is a regulated process. We cannot simply send money to "any" account investor's request.

Source of Funds Verification (AML/BSA) ​

To comply with the Bank Secrecy Act (BSA) and prevent money laundering (Layering):

  • The Rule: Funds must be returned strictly to the originating source.

  • Implementation:

    • Fiat: If investor paid via Chase Bank Acct ending in *1234, the refund is hard-coded to go back to Chase Bank *1234.

    • Crypto: The Smart Contract records investor's address at the time of deposit. The refund function can only send tokens back to that specific wallet address.