Logistics and supply chain startup ShipChain has refuted the claim of South Carolina regulators that it ran afoul of state securities laws, according to a statement May 24.

Earlier this week, the company was issued a cease-and-desist order from the South Carolina Attorney General’s office. The order stated that ShipChain was offering securities to state residents without being registered as a broker-dealer by the proper authorities. The offerings in question are the SHIP tokens, which can be used to make transactions on the startup’s Ethereum-based platform. 

In their statement, ShipChain says that the state commissioner did not contact them to verify any of the claims leveled against the company. According to ShipChain, their private token sale was conducted in accordance with applicable securities laws, and that it was held in January, before the company moved its development team to the state of South Carolina.

ShipChain claims that they have not been “offering, issuing, or selling” tokens since the private sale, nor do they have plans to do so “in the foreseeable future.” The firm also maintains that tokens were only sold to qualified investors, among whom none were South Carolina businesses or residents. They state:

“ShipChain is not aware that SHIPs were even offered in South Carolina or to any South Carolinian during the private sale.”

According to the cease-and-desist order, the company has 30 days to request a hearing to clarify the matter.

On May 21, US and Canadian state and provincial securities regulators opened probes into potentially fraudulent crypto businesses in an initiative dubbed “Operation Cryptosweep.” Regulators from 40 jurisdictions coordinated by the North American Securities Administrators Association (NASAA) have started up to 70 investigations, with more reported to follow in the coming weeks.