I personally think they should abandon their ICO and try to find an alternative way to raise funds for their development. I would suggest the ONAM team looks into starting their own STO or trying to secure private investments.
Yes, you are right. But the money raised at the ICO is easy money, you can spend it on cars and traveling - and this will not be against the law.
That could be a possible alternative but I think given they are starting an Exchange they have a good shot if they target private investors. ICOs are not that effective now.