Massachusetts Securities Regulator Shuts Down Five ICOs

Massachusetts Securities Regulator Shuts Down Five ICOs

William Galvin, Massachusetts Secretary of the Commonwealth, has shut down five ICOs for selling “unregistered securities.” All five ventures – 18 Moons, Across Platforms, Mattervest, Pink Ribbon and Sparco – had business addresses in Massachusetts but had failed to register their offerings.

For Galvin that is a “red flag” and he encouraged Massachusetts residents considering an ICO investment to “make sure the people they are giving their hard-earned money to are legitimately doing business.

“We have to know who you are”

Federal regulators in the U.S. have taken the view that ICO tokens are securities, with SEC chairman Jay Clayton famously telling congress that “every ICO I’ve seen is a security.” The approach appears now to have now trickled down to state level.

The Massachusetts enforcement orders state that each ICO “shall not make offers and sales of [the relevant token] in Massachusetts until [the relevant token], or such offerings, are registered as securities or are exempt from registration.” 

Not only have the sales been stopped, but the ICOs in question must return investors’ funds within a month and supply written documentation that the refunds have taken place.

All of the ICOs have reportedly stopped operations, though the option remains for them to register their tokens as securities or apply for an exemption.

18Moons, a creator and distributor of children’s television programmes registered in Newton, MA, says on its website that the offering is postponed and the new token sale date is “to be announced” at a later stage. As of writing, none of the ICOs in question have given any updates on the ruling on either their Twitter or Telegram channels.

Galvin himself is known for a certain hostility to the crypto phenomenon. In December 2017 he warned against Bitcoin, saying that it was, “the latest in a history of speculative bubbles that most often burst” and which “more often than not, end in disaster for the average investor.”

His latest intervention is the second time this year that the state has stepped in to halt an ICO. In January it sued the Caviar ICO, again for conducting an unregulated sale of securities. “It’s not for me or my office to say that this is a good or a bad investment,” he said, but “if you’re offering this for investment in Massachusetts, we have to know who you are.