While startups, across the globe, have raised millions of dollars online through ICOs, often with little more than a handful of employees, given the high risks faced by investors from such ventures, regulators are increasingly putting ICOs under the scanner.

On Thursday, the Australian Securities & Investments Commission (ASIC), Australia’s corporate watchdog, stated it was increasing its scrutiny on “misleading” initial coin offerings (ICOs) which are targeted at retail investors.

It has already acted against several such proposals.

The way ASIC sees is that there are several consistent issues surrounding ICOs, which include “misleading or deceptive” statements in marketing materials and sales; many of the entities conducting the ICOs do not also hold Australian financial services licenses.

The development comes at a time when the sale of digital coins or tokens have become increasingly popular among startups with many of them opting to take the ICO route to finance projects.

Although currently the ICO market is relatively small in Australia, ASIC is concerned that the poor conduct of startups who opt for the ICO route could have a negative impact on investor confidence.

“If you raise money from the public, you have important legal obligations,” said John Price, ASIC’s Commissioner in a statement. “It is the legal substance of your offer – not what it is called – that matters”.

He went on to add, a few proposed ICOs had operated illegally, and were unregistered investment schemes.

From April 2018, ASIC has prevented 5 ICOs from raising funds in Australia. While some of these ICOs have been put on hold till they comply to Australia’s legal requirements, the others have been stopped, said ASIC.

“ICOs are highly speculative investments that are mostly unregulated, and while there are genuine businesses using this structure many have turned out to be scams,” ASIC noted.

There are also significant risks associated with raising funds through the ICO route.

Case in point: Group IB, a Moscow-based cyber security firm which raised funds through ICOs, was attacked by cyber criminals 100 times a month on average. This highlights and underscores the risks of startups take when investing in cryptocurrency ventures online.