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

In a move that signals how the U.S. watchdogs 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 its own digital tokens. They were ‎all either incorporated in Massachusetts or named the state as ‎their principal ‎place of business.‎

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.

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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