By Bloomberg
Updated: March 1, 2018 12:01 PM ET

Expanding a broad crackdown on fraudulent initial coin offerings, U.S. regulators have sent a number of subpoenas to firms they suspect might be violating securities laws, said a person with direct knowledge of the matter.

The Securities and Exchange Commission has been concerned for months that some ICOs are raising money for businesses that don’t even exist. The agency has issued subpoenas to firms and individuals behind specific offerings that it believes might be breaking the law, said the person who asked not to be named because the investigations aren’t public.

In ICOs, a company sells digital tokens that can be eventually redeemed for goods and services. The market has been red hot, with firms raising about $8.7 billion, according to CoinDesk, which tracks the offerings. The SEC is worried that in many cases, small investors, aren’t adequately researching the risks involved.

SEC spokeswoman Judith Burns didn’t immediately return a phone call seeking comment.

SEC Chairman Jay Clayton has repeatedly said that the vast majority of ICOs should be registered with the agency. That’s because the coins trade on secondary markets like other securities the SEC regulates. But ICOs have been slow to subject themselves to the agency’s oversight. In a January interview, Clayton pledged to sanction more firms “if people don’t change their ways.”

Read More: Signaling Crackdown, SEC Boss Emerges as Crypto Skeptic-in-Chief

The subpoenas are being coordinated with the SEC Enforcement Division’s cyber unit, which was created last year. The Wall Street Journal earlier reported that the SEC had issued subpoenas.

The SEC has already brought a number of cases involving ICOs, including one in January against a Texas-based offering that claimed to have raised $600 million using former boxing champ Evander Holyfield as a celebrity endorser. The agency said the company involved, AriseBank, illegally raised money from investors without registering the offering with regulators.

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