Massachusetts Crackdown Reflects Increased State Regulation Of ICOs

On March 27, 2018, the top securities regulator in Massachusetts issued consent orders halting five initial coin offerings — including projects that sought to raise capital to assist families affected with cancer and to support the programming for children — based on allegations that the token sales constituted unregistered securities offerings in violation of state law.¹ Among other things, a number of the companies behind the ICOs, each of which were either incorporated or primarily did business in the state, agreed to refund investors as a condition of settlement. The consent orders come on the heels of increased federal scrutiny of ICOs by the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission, and serve as a reminder that market participants in the virtual currency space must be mindful of state regulators as well.