SEC: “We continue to be on the lookout for violations.”

The Securities and Exchange Commission has imposed civil penalties against two crypto companies which were accused of violating ICO securities offering registration rules.

Both firms, Carrier EQ (also known as Airfox) and Paragon Coin Inc., sold digital tokens through ICOs in 2017 after the SEC had already “warned” that ICOs could be deemed securities offerings in its July 2017 DAO report of investigation. Both companies’ tokens were judged to be securities, and were therefore required to have been registered with the agency before any tokens were sold.

Airfox is a Boston-based startup, which was able to raise $15 million to fund the development of its token driven ecosystem. Acording to the Airfox website, their token is an Ethereum-based ERC-20 token that facilitates the transfer of mobile airtime, data and currency, as well as payments for goods and services.

Paragon Coin was able to raise $12 million to develop and implement their business plan to join blockchain technology and the cannabis industry, and work toward the legalization of cannabis.

The decision of the SEC was that both companies would pay a fine of $250,000 and compensate harmed investors who purchased tokens in the illegal offerings. Furthermore they are required to register their tokens as securities in accordance with the Securities Exchange Act of 1934, and file periodic reports with the agency for at least 1 year.

“By providing investors who purchased securities in these ICOs with the opportunity to be reimbursed and having the issuers register their tokens with the SEC, these orders provide a model for companies that have issued tokens in ICOs and seek to comply with the federal securities laws.”

This is what the Co-Director of the SEC’s Enforcement Division Steven Peikin said. These decisions follow after the Commission’s “first non-fraud ICO registration case” involving a company called Munchee Inc. The company stopped its ICO before minting any tokens, and returned all proceeds to its investors, and by doing so avoided penalties from the Commission.