(Reuters) — The U.S. Securities and Exchange Commission settled charges on Friday with two technology companies for improperly offering digital tokens, mandating that they register their offerings as securities and reimburse investors.

The action marked the first time the regulator has imposed penalties against tech startups that skirt its registration rules when making “initial coin offerings.” It also underscores a ramping up of the SEC’s oversight of the cryptocurrency space as it looks to protect investors from potential scammers.

The SEC had warned in March that it would hold most token offerings to the same standards as securities offerings, and impose fines on bad actors that violated securities laws.

After raising a combined $27 million from investors, CarrierEQ Inc. (Airfox) and Paragon Coin Inc,. agreed to pay investors back, and each will pay $250,000 in fines as part of the settlement, the regulator said in a statement.

“Airfox expects to continue growing its blockchain platform within a regulatory framework,” the company said in a statement.

The companies didn’t admit or deny the SEC’s charges, but both agreed to file periodic reports for at least 12 months.

“These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets,” said Stephanie Avakian, one of the SEC’s enforcement chiefs.

The SEC has said that firms looking to raise money through ICOs must fall in line with conventional offering rules, either registering as an initial public offering or seeking an exemption under the private placement or crowdfunding rules.

It has also said that firms wishing to offer trading in tokens should consider registering as an exchange or an alternative trading system.

This month, the SEC settled charges against the founder of cryptocurrency token trading platform EtherDelta over operating an unregistered securities exchange, in another milestone enforcement action.

“The SEC ... has put issuers and other interested parties on notice that most ‘ICOs’ are securities offerings or securities token offerings,” Dina Ellis Rochkind of the New York law firm Paul Hastings LLP said in an email.