Massachusetts Watchdog Halts Five Firm’s ‘Unregistered’ ICO Sales

The list includes Mattervest Inc, Pink Ribbon ICO, Across Platforms Inc, ‎Sparkco Inc and 18 ‎Moons.

Financial regulators in Massachusetts on Tuesday clamped down on initial coin offerings ‎‎‎(ICOs) from five tech startups, saying the firms failed to register their digital ‎coins as ‎securities.‎

In a move that signals how the US watchdogs will aim to police a recent ‎deluge of ‎cryptocurrency-linked fundraising, the Massachusetts Securities ‎Division stopped ‎Mattervest Inc, Pink Ribbon ICO, Across Platforms Inc, ‎Sparkco Inc, and 18 Moons ‎from offering their own digital tokens. They were ‎all either incorporated in Massachusetts or named the state as ‎their principal ‎place of business.‎

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The order ‎also forces the named ICO ‎organizers to return cash to investors in case ‎they had raised any funds. ‎

‎“An offering done to avoid registration with regulators should be seen as a ‎‎red flag, and you should contact my office before investing,” said William Galvin, the secretary of the commonwealth in Massachusetts.

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The five firms were linked to promotional campaigns on Twitter, Reddit, ‎and ‎YouTube, though most of those social channels have announced ‎‎restrictions on cryptocurrency and ICO adverts.

The continued clampdown on ICOs strikes at the heart of a legal theory that ‎had ‎allowed several startups to raise decent investments last year. Previously, ‎the ‎organizers argued that their digital coins weren’t subject to securities ‎laws if the ‎issuance ‎was made as a utility, where contributors acquire ‎certain rights to use a ‎service.‎

The SEC has repeatedly warned investors against ‎throwing money into ‎ICOs, as such crowdsales are intended ‎to launch an ‎‎investment scheme ‎without even attempting to follow US laws.‎

In December 2017, the top US regulator halted the ICO of Munchee ‎‎Inc, which was seeking to raise up to $15 million from thousands of ‎investors ‎‎to develop an iPhone app for restaurant meal reviews.‎

At the time, the California-based company agreed to stop its ICO and ‎refund ‎investor proceeds after the SEC released a report ‎stating that its ‘MUN ‎tokens’ fit the hallmarks of a ‎security.‎

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