William Galvin, the secretary of the commonwealth in Massachusetts has ordered five firms that were allegedly conducting initial coin offerings (ICO) for cryptocurrencies, to halt the sale or offer of their “unregistered securities”.
Following investigations into each of the companies, his office has ordered Mattervest Inc, Pink Ribbon ICO, Across Platforms Inc, Sparkco Inc and 18 Moons to stop the sale of their coins.
The starups, which were all either incorporated in Massachusetts or named the state as their principal place of business, advertised their ICOs on Twitter, Reddit, YouTube and other social media websites; however, as of Tuesday, the website for Pink Ribbon ICO, a Facebook page, are displaying a message saying it was unavailable.
Individuals associated with the promotions were not registered with Galvin’s office to offer or sell securities, according to the statement .
The firms were also ordered to return the cash to investors in case they had raised any funds, and were also ordered to provide a list of every refunded investor after paying back the companies.
Regulators have in recent months started to clamp down on ICOs, online fundraisers through which new cryptocurrencies are parceled out to buyers.
Galvin said ICOs are often used by companies seeking to avoid investor protection provisions required by federal and state laws. He adivised investors to make sure the people they are giving their hard-earned money to are legitimately doing business.
“Do not be fooled by get-rich schemes trying to capitalize on the current Bitcoin craze,” Galvin said. “An offering done to avoid registration with regulators should be seen as a red flag, and you should contact my office before investing.”
In February, Securities and Exchange Commission Chair said that he believed most digital coins were effectively securities and should be regulated as such. The SEC has also launched multiple probes, saying many coin issuers may have breached its rules.