This decision is caused by the alleged violation of the requirements of regulatory acts on securities operating in the state. This is reported by Coindesk.
The Securities Commissioner of South Carolina argues that the startup was engaged in the distribution of investment contracts under the guise of digital tokens, which are "the only medium of exchange on its platform."
At all times relevant to this Order, Respondent ShipChain continuously offered investment opportunities in the ShipChain platform and the corresponding tokens to South Carolina residents through its website and in-person events held in South Carolina. At no time relevant to the events stated herein was Respondent ShipChain registered with the Division as a broker-dealer, and no exemption from registration has been claimed by Respondent ShipChain.
Attorney General's Office of South Carolina Cease-and-Desist Order
ShipChain positions itself as a blockchain-based platform for delivery tracking. It is the member of the Blockchain in Transport Alliance along with such well-known companies as FedEx and JD.com.
Within 30 days, a start-up may request a hearing on the case, during which it must prove why the sale of its tokens is not the distribution of unregistered securities. Otherwise, ShipChain will be prohibited from "doing business" and "participating in any aspect of the securities industry in or out of South Carolina."
In their Twitter ShipChain reported that their lawyers intend to respond to the demand of the regulator as soon as possible.