The US Securities and Exchange Commission has halted a multi-million dollar digital token sale by California-based restaurant review app firm Munchee.
SEC chairman Jay Clayton said there were substantially more opportunities for fraud from initial coin offerings.
It's the latest in a string of warnings from global regulators.
Initial coin offerings (ICOs) let startups quickly raise capital by issuing virtual tokens to investors, usually in exchange for more established crypto-currencies such as Bitcoin or Ethereum.
These tokens typically use blockchain, which uses cryptography to record transactions which can then be authenticated.
US identity verification firm Civic raised $33m (£26m) this year, while blockchain technology firms Bancor and Tezos raised more than $350m. The value of Bancor tokens have dropped by about half since June, according to the firm's website.