Massachusetts Suspends 5 ICOs Citing ‘Unregistered Securities’

The Massachusetts Securities ‎Division has suspended five initial coin offerings (ICOs), under the pretext that the tech firms are selling “unregistered securities”.

Five ICOs suspended under Massachusetts law

Massachusetts law requires digital coins to be registered as securities. The five firms issued the consent orders requiring permanent suspension include MattervestPink Ribbon ICOAcross Platforms‎Sparkco, and 18 ‎Moons. All tech firms involved were either incorporated in Massachusetts or named the state as ‎their foremost ‎place of business.‎

The publicly-available documentation of the incident indicates that Massachusetts Secretary of the Commonwealth William Francis Galvin was responsible for shutting down the ICOs in the state. The firms were also instructed by the Securities ‎Division to issue rescission letters to investors, alongside a full refund within 45 days of the division’s order.

Galvin advised that ‎“an offering done to avoid registration with regulators should be seen as a ‎‎red flag, and you should contact my office before investing”.

The five firms involved held promotional campaigns on Twitter, Reddit ‎and ‎YouTube, although a large number of social media channels recently announced a restriction on cryptocurrency and ICO advertisement.

At the time of publishing, the only company to officially shut down their ICO was Mattervest, stating on their website they have ”ceased operations”. The Pink Ribbon ICO website and Facebook page both report as “unavailable”. The websites of Across Platforms‎Sparkco, and 18 ‎Moons are still fully operational at press time.

The laws in the US

US regulators have recently continued to restrict the operations of ICOs operating across the country. These measures challenge the heart of US legal theory that allowed startups to raise significant amounts in ICOs and similar events just last year.

The organizers of the coin offerings prior to these recent measures argued that their digital tokens were not subject to securities ‎laws if the ‎issuance ‎was made as a utility. This gave investors their own specific rights to use the coins as a service.

The top US financial regulator shut down the ICO held by Munchee ‎‎Inc in December 2017. The firm had a hard cap of USD 15 million, with thousands of investors set to participate in the development of Munchee Inc’s restaurant review iOS app. The California-based company cooperated in halting their ICO and reimbursed investors after the official report stated that the MUN tokens offered required registration as a security.

The event was first reported by Finance Magnates on Tuesday, 27 March.

 

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