Blockchain and crypto investment firm and hedge fund Pantera Capital has warned that a quarter of its ICO projects could be found to violate the United States’ securities laws

Pantera Capital Management, an investment firm focused exclusively on ventures, tokens, and projects related to blockchain tech, digital currency, and crypto assets, said about 25 percent of the projects that its ICO fund invested in could be in violation of U.S. securities laws and may have to refund money to their buyers.

Three year old, California-based hedge fund said the projects may be at risk after the U.S. Securities and Exchange Commission’s Nov. 16 announcement that two ICO startups that raised millions by issuing tokens to non-accredited investors didn’t comply with securities laws.  CarrierEQ Inc., also known as Airfox, and Paragon Coin Inc., both of which conducted token sales last year where Airfox raised $15 million through its sale, while Paragon raised $12 million, according to statements.

For many ICO-financed firms, the SEC’s recent actions have largely made them surrender on the idea that new crypto tokens created and sold to investors could be considered “utility tokens,” a term denoting a digital commodity meant to represent digitally unique data on a blockchain protocol.

Pantera officials 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,” Dan Morehead and Joey Krug, Pantera’s co-chief investment officers, wrote in the newsletter Thursday. “If any of these projects are deemed to be securities, the SEC’s position could adversely affect them. Of these projects, about a third (approximately 10 percent of the portfolio) are live and functional and, while they could technically continue without further development, ending development would hinder their progress.”

Also read: Role of Blockchain developer is the most rapidly growing emerging job in the U.S.