Massachusetts has ordered the stoppage of five initial coin offerings (ICOs), stating in new orders that the companies behind them were selling unregistered securities.
Government officials found that they were all in violation of the state's "General Laws," which define securities as stocks, bonds or investment contracts that guarantee a financial return, as defined within the orders. The halts were part of a broader inquiry into token sales being conducted by the state government.
All of the companies are further required to offer to return funds to their investors within 30 days. The companies would have an additional 45 days to actually return the funds, starting from when the investor accepts the refund.
The startups will have to provide a list of every refunded investor after paying back the companies, according to the orders.
While the orders noted that the campaigns “shall permanently cease and desist from selling unregistered or non-exempt securities” within the state, all of the startups are able to register their tokens as securities - or apply to sell “exempt from registration securities” - in the future.
Notably, the orders will suspend the investigations into the companies until they have complied with the orders.
However, if any of the companies "[fail] to comply with any of the terms set forth in the Division's Order, the Enforcement Section may take appropriate action."
The developments represent the latest step taken by Massachusetts on the ICO front. Earlier this year, the state filed suit against an ICO organizer and his company, alleging that the token sale represented an unregistered securities offering.
Map of Massachusetts via Shutterstock
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