If initial coin offerings have been the Wild West of the investment world, then the sheriff has just arrived to bring order.

Issuers of digital tokens clothed their offerings in the guise of being unregulated cryptocurrencies that do not fall under the federal securities laws. But a recent decision in U.S. District Court in New York may be a first step in putting an end to that view.

Federal prosecutors filed charges in October against Maksim Zaslavskiy, who created two companies, REcoin and Diamond, to invest in real estate and diamonds. He raised about $300,000 through initial coin offerings in which investors would receive tokens that he claimed would be backed by real assets. But according to prosecutors, no assets were ever purchased with the money.

The Justice Department accused him of conspiracy and securities fraud, based on allegedly false statements he made to attract funding. Zaslavskiy filed a motion to dismiss the charges. He argued that virtual currencies from REcoin and Diamond were not securities, and that therefore the government did not have jurisdiction over them and could not prosecute him for fraud.

Judge Raymond Dearie rejected that argument as “overly narrow.” The issue is whether an initial coin offering is an “investment contract” that would bring it under the definition of a security.

The Supreme Court adopted a test in 1946 in SEC v. Howey that looks at four factors to determine whether a transaction involves an investment contract: (1) an investment of money (2) in a common enterprise (3) for the purpose of making profits (4) from the efforts of others. In that case, the court found that putting money into a Florida orange grove was an investment contract subject to the securities laws because investors would reap gains through the work of others.

Dearie rejected the defense argument that purchases of REcoin and Diamond tokens were not an “investment of money” because they were just an exchange of one currency (dollars) for another (digital tokens). The judge also found that statements promoting the offerings had promised profits, with REcoin described as “an attractive investment opportunity” that “grows in value.”

The decision makes it clear that it will be up to a jury to decide whether the digital tokens were investment contracts. But by allowing the case to go forward, Dearie provided the first opinion finding that they could come within the federal securities laws.

The Securities and Exchange Commission issued a report in July 2017 asserting that initial coin offerings are subject to the securities laws and that it had authority over these transactions. But the agency’s position does not necessarily have the force of law, so letting the prosecution of Zaslavskiy proceed bolsters efforts to police initial coin offerings more aggressively.

The prosecution of Zaslavskiy is not the only criminal case involving digital assets. In April, federal prosecutors in New York filed securities and wire fraud charges against three defendants accused of obtaining more than $25 million from investors in a startup called Centra Tech. The company used an initial coin offering to help finance what it claimed was the development of a debit card, to be licensed by Visa and Mastercard, that would allow holders to load it with the cryptocurrency of their choice and then use the card to make purchases.

The goal of many cryptocurrency owners is to have easy access to their holdings, making them more like dollars in a bank account that can be freely spent on everyday purchases. What Centra offered sounded almost too good to be true. The company claimed it had licenses in 38 states and a partnership with Bancorp to issue its cards, but prosecutors assert that none of that was true. The SEC joined the case by filing civil fraud charges against the three defendants, claiming the offering of the digital tokens constituted a sale of unregistered securities.

The SEC has also stepped up its enforcement of the initial coin offerings by settling a case on Sept. 11 against TokenLot, which described itself as the “ICO Superstore,” and its owners for acting as an unregistered broker. If digital tokens are securities, then firms providing a platform to bring together buyers and sellers must meet the basic requirements for being a brokerage firm, which include registering with the SEC and maintaining adequate capital to protect clients. The settlement requires a payment of nearly $480,000 by the firm and $45,000 in penalties against its two owners for failing to comply with the registration requirements.

The message from the TokenLot’s case is that those who want to cater to investors in digital tokens will need to adhere to SEC oversight of their exchanges. Although becoming a broker is costly, a firm that does so could use that status as a marketing tool by telling potential customers they will be much safer trading through its platform than on unregulated exchanges where assets could be stolen with no recourse for the victims. Like car companies that tout their safety measures under rules they long fought, a properly registered broker can offer much greater client protection that customers may be willing to pay up for.

Initial coin offerings have raised billions of dollars over the past few years, and that much money is sure to draw the attention of the SEC and the Justice Department because of the potential for scams. Any slice of the investment universe that claims not to be subject to regulation is unlikely to stay that way for long before the government demands that the players follow the same rules that apply to everyone else trying to raise money from the public.