Massachusetts regulator blocks ICOs by five firms

NEW YORK (Reuters) - Massachusetts’ top securities regulator has ordered five firms that were allegedly conducting initial coin offerings for cryptocurrencies in the state to halt the sale or offer of their “unregistered securities,” he said on Tuesday.

William Galvin, the secretary of the commonwealth in Massachusetts, said his office ordered Mattervest Inc, Pink Ribbon ICO, Across Platforms Inc, Sparkco Inc and 18 Moons to stop sales of their coins.

Efforts to reach the five firms were unsuccessful. Mattervest’s website displayed a message saying the firm has ceased operations. Across Platforms, Sparkco Inc and 18 Moons did not respond to phone calls and emails requesting comment.

The website for Pink Ribbon ICO, a Facebook page, displayed a message saying it was unavailable on Tuesday.

The firms, which were all either incorporated in Massachusetts or named the state as their principal place of business, advertised their initial coin offerings on Twitter Inc, Reddit, YouTube and other social media websites.

Individuals associated with the promotions were not registered with Galvin’s office to offer or sell securities, according to the statement.

“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 in recent months started to clamp down on ICOs, online fundraisers through which new cryptocurrencies are parceled out to buyers.

U.S. Securities and Exchange Commission Chair Jay Clayton said in February that he believed most digital coins were effectively securities and should be regulated as such. The SEC has also launched multiple probes, saying many coin issuers may have breached its rules.

At the same time, technology firms have started to crack down on issuers using their platforms to promote their coin offerings.

On Monday, Twitter said it will ban cryptocurrency advertising, including advertisements of ICOs, in an effort to avoid giving publicity to potential fraudulent actors.

It joins Facebook Inc and Alphabet Inc’s Google, and will roll out the ban over the next month.

Reporting by Elizabeth Dilts and Anna Irrera in New York; Editing by Matthew Lewis