The state of New Jersey has filed a complaint against Pocketinns for selling unregistered securities through an initial coin offering (ICO).

According to the complaint registered on July 17, the blockchain-based company sold more than $400,000 unregistered securities from New Jersey in the form of PINNS tokens.

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The state’s Attorney General’s office and the New Jersey Bureau of Securities have filed the legal complaint against the company along with its president Sarvajnya G. Mada.

“Our securities laws apply to anyone offering or selling securities in this state, regardless of whether those securities are purchased with U.S. dollars or virtual currencies, and regardless of whether they are distributed in certificated form or through blockchain technology,” Gurbir S. Grewal, New Jersey’s Attorney General, said.

Crackdown against unregistered securities

The lawsuit alleged that the company violated the state’s securities law and sold the tokens to 217 investors, only 11 of whom submitted their documentation for being accredited investor. It further alleged that Mada acted as an unregistered agent, further violating the state’s laws.

“The lawsuit we filed makes it clear that individuals selling cryptocurrency-related investment products in New Jersey must comply with the law or face serious consequences,” Grewal added.

The company received funds in Ether from the investors and was aiming to raise up to $46 million by selling 30 million PINNS tokens.

“By failing to take reasonable steps to verify that purchasers were accredited investors capable of bearing the increased risks associated with unregistered securities, the defendants violated the law and exposed investors to financial losses that could have been devastating,” Paul Rodríguez, acting director of the Division of Consumer Affairs, said.

Meanwhile, the Securities and Exchange Commission (SEC) is also in a constant pursuit for unregistered tokenized securities offerings and shady projects. In May, the agency sued the owner of iPro Network for making false claims while raising $26 million.