The Secretary of the Commonwealth in Massachusetts has stopped five firms from conducting initial coin offerings (ICOs) for cryptocurrencies in the state.
According to Reuters, William Galvin, Massachusetts’ top securities regulator, has ordered the firms to stop the sale of the “unregistered securities.”
The five firms are Mattervest, Inc., Pink Ribbon ICO, Across Platforms, Inc., SparkCo, Inc. and 18 Moons.
None of the firms were available for comment, but Mattervest’s website featured a message saying the firm has ceased operations, while the website for Pink Ribbon ICO, a Facebook page, simply showed a message saying it was unavailable.
The firms were all either incorporated in Massachusetts or named the state as their principal place of business. The ICOs were advertised on Twitter, Reddit, YouTube and other social media websites. No one associated with the sales was registered with Galvin’s office to offer or sell securities.
“An offering done to avoid registration with regulators should be seen as a red flag, and you should contact my office before investing,” Galvin said.
Regulators have been getting tougher on ICOs in recent months, with U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton saying that most digital coins were effectively securities and should be regulated by the agency. The SEC is also investigating coin issuers that may have breached the SEC’s rules.
Social media sites have also been clamping down on ICOs. This week, it was revealed that Twitter is preparing to prohibit cryptocurrency ads on its site. The policy will prohibit advertisements for ICOs, token sales and cryptocurrency wallets globally. There is also the chance that the social media site will ban all crypto exchange ads, with a few exceptions.
This follows Facebook's decision to ban ads that promote “financial products and services frequently associated with misleading or deceptive promotional practices.” Beyond its own app, Facebook will also ban such ads on Instagram and within its network of third-party apps.
And Google announced it has decided to not run ads for cryptocurrencies as part of its efforts to clamp down on advertisements that run afoul of its policies. The company said the new policy, which is slated to launch in June, will ban ads for cryptocurrencies, related content and financial spread betting, among other things.