Bitcoin in the hands of a child. The boy holds a metal coin of crypto currency in his hands.

U.S. regulators settled with a blockchain startup, ruling that the tokens issued in an initial coin offering (ICO) should be treated as securities.

The U.S. Securities and Exchange Commission (SEC) settled charges against Enigma MPC, a blockchain company based in San Francisco and Israel.

The SEC’s order found that the company’s ICO in 2017, which raised US$45 million by issuing 75 million digital tokens, amounted to an unregistered securities offering.

It found that the tokens “were offered and sold as investment contracts, and therefore securities,”and that the company violated securities laws by not registering them as securities or qualifying for an exemption.

In settling the case, Enigma agreed to a process for returning funds to investors and to register its tokens as securities. It also agreed to pay a US$500,000 penalty.

The company settled the case without admitting or denying the SEC’s findings.

“All investors are entitled to receive certain information from issuers in connection with a securities offering, whether it involves more traditional assets or novel ones,” said John Dugan, associate director for enforcement in the SEC’s Boston office.

“The remedies in today’s order provide ICO investors with an opportunity to obtain compensation and provide investors with the information to which they are entitled as they make investment decisions,” he added.