Galvin announces ‘landmark settlement’ with coin offering issuer AirFox

PROVIDENCE – Mass. Secretary of the Commonwealth William F. Galvin has reached a “landmark settlement” with Boston-based initial coin offering issuer AirFox.

AirFox agreed to pay a $100,000 penalty after Galvin’s office maintained the company’s sale of so-called “AirTokens” constituted the sale of unregistered securities.

“As I said when my office first began its sweep of [initial coin offerings] last year, there is little question that many of these ICOs constitute securities offerings which need to be registered or [classified] exempt from registration in the Commonwealth,” Galvin said in a statement. “My office will continue to aggressively police these offerings in Massachusetts to protect our investors.”

As part of the settlement, AirFox has agreed to register its AirTokens as a class of securities with the U.S. Securities and Exchange Commission and to offer compensation to initial coin offering purchasers.

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Last year, AirFox raised $15 million in investments through an initial coin offering of AirTokens, which the company used to fund the development of an AirFox internet browser app. The app was intended to allow users to view advertisements in exchange for AirTokens, which would then be exchanged for free mobile data. AirTokens are ERC20 tokens issued on the Ethereum blockchain, according to Galvin’s office.

Though the terms of AirFox’s initial coin offering required purchasers to agree that they were buying AirTokens as a utility in exchange for mobile data and not as an investment or security, AirFox primarily aimed its promotional efforts for the initial coin offering at digital token investors, rather than anticipated users of AirTokens. Investors in AirTokens reasonably expected to profit from their investment, the consent order states.

In addition to registering its AirTokens with the SEC, AirFox agreed to register any future securities with the Mass. Securities Division. AirFox has also agreed to offer refunds of any losses incurred by those who bought tokens through the offering, Galvin’s office said.

His office opened the investigation last December.

Scott Blake is a PBN staff writer. Email him at