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Pantera Capital Management believes 25% of blockchain and cryptocurrency projects that it has invested in could be found in violation of U.S. securities laws, Bloomberg reported. As a result, they may have to refund affected investors.

As is the case with many initial coin offerings (ICOs), where the project’s developers are more interested in getting rich quick than building a sustainable digital currency, Pantera’s portfolio includes project that didn’t register with the Securities and Exchange Commission (SEC) and sold to non-accredited investors.

Dan Moreheard and Joey Krug, co-chief investment officers of Pantera, told Bloomberg, “While we believe the vast majority of the projects in our portfolio should not be affected, approximately 25 percent of our fund’s capital is invested in projects with liquid tokens that sold to U.S. investors without using regulation D or regulation S.”

Pantera advertises themselves as “an investment firm focused exclusively on ventures, tokens, and projects related to blockchain tech, digital currency, and crypto assets.” It’s surprising then that a firm that is so focused on cryptocurrency investment would put their customers’ funds at such risk. Credit to them for taking the position that they will offer refunds, rather than leave them at a loss.

ICO fraud is a hot topic of late. The SEC recently called for closer monitoring and regulation of potentially fraudulent token crowdsales, and warned celebrities to be wary of sponsorship deals with them. AriseBank’s founder and CEO was also arrested in November for a multi-million dollar scam tied to its ICO. With this stain on the cryptocurrency marketplace, legitimate and fraudulent ICOs alike have found it more difficult to raise funds and find developers to support them.

Despite the loss of confidence and investor money caused by ICOs during the crypto boom, there is a silver lining. As the Founding President of the bComm Association Jimmy Nguyen has said, it’s time for space to grow up and professionalize. If weaker ICOs can’t get off the ground, the industry will have gotten rid of weaker hands, leaving only stable, safe options left.

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