The chairman of the Securities and Exchange Commission (SEC) on Monday warned investors of the dangers of putting their money into cryptocurrencies, saying trading and public offerings in the emerging asset class may be in violation of federal securities law.

The statement by Jay Clayton came just hours after the U.S. securities watchdog stepped in to stop an “initial coin offering” (ICO) from a restaurant review app, after the company failed to register it as a security.

ICOs allow startups founded on cryptocurrency technologies such as blockchain to quickly raise capital by issuing virtual tokens to investors. Such offerings have become more common in the past year, but little data about them is available because the market has been largely unregulated.

Monday’s enforcement action was significant because it showed SEC would step in to address ICOs for registration violations even if there were no claims of fraud, according to SEC officials.

“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that … there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation,” Clayton said.

“If an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost,” he told investors in the statement.

Clayton also warned industry professionals that ICOs in many cases would need to comply with federal rules governing the issuance of securities, including registering with the SEC or qualifying for an exemption that allows issuers to sell shares privately to accredited investors.

He added that many platforms trading in cryptocurrencies may also be in violation of laws that require them to register as an exchange, or an alternative trading platform.

Munchee

On Monday morning, the SEC halted an ICO because it had not registered with the regulator. Privately held Munchee Inc agreed to halt its offering and refund investor proceeds after the SEC contacted the company on Nov. 1, the regulator said.

The SEC objected to Munchee’s plan to raise $15 million in capital by selling “MUN tokens,” which could be purchased or earned by users for writing restaurant meal reviews on its app. The company also said it was in talks with restaurants to accept those tokens for meals, and to sell advertising in exchange for tokens, and that the tokens could increase in value.

The SEC said investors could reasonably expect a return on its investment in MUN tokens, which in turn would make it a security requiring SEC registration.

Munchee consented to the SEC’s order without admitting or denying the findings. The company did not immediately respond to a request for comment.

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Earlier this month, the SEC’s newly created cyber unit filed its first ICO charges against a privately held company, PlexCorps, saying it had defrauded investors with its “PlexCoin” ICO. That case is pending in a New York federal court.