California-based Munchee Inc. has agreed to an order to suspend its initial coin offering (ICO) after The U.S. Securities and Exchange Commission warned the offering may violate securities laws, the regulator announced on Monday.

Munchee agreed to the SEC’s order without admitting or denying the SEC’s findings. The company sought to raise US$15 million to finance the development of its blockchain-based food review service.

The offering ran afoul of securities laws because the tokens being offered could be considered securities, the SEC says in its announcement.

The company promoted the expectation that the tokens being issued would increase in value, and pledged to help create a secondary market for the tokens. “Because of these and other company activities, investors would have had a reasonable belief that their investment in tokens could generate a return on their investment,” the SEC says.

The regulatory status of ICOs,and cryptocurrency offerings generally, remains somewhat murky. Regulators in Canada, the U.S. and elsewhere have warned that offerings may come under securities law, depending on the specific details of the offering, and whether the virtual tokens and coins being issued qualify as securities. In those cases, securities registration, disclosure and other requirements apply.

“We will continue to scrutinize the market vigilantly for improper offerings that seek to sell securities to the general public without the required registration or exemption,” said Stephanie Avakian, co-director of the SEC’s enforcement division, in a statement.

“In deciding not to impose a penalty, the commission recognized that the company stopped the ICO quickly, immediately returned the proceeds before issuing tokens, and cooperated with the investigation,” she adds.