A federal judge has granted the U.S. Securities and Exchange Commission's request for an injunction blocking the backers of the Blockvest initial coin offering from making an allegedly fraudulent securities offering.

U.S. District Judge Gonzalo Curiel of the Southern District of California late last year turned back a prior SEC injunction request after finding the agent couldn't show that investors had bought into the Blockvest ICO with an expectation of making a profit from the efforts of others. But on Thursday, Curiel granted the agency's renewed injunction bid finding that the SEC had made the case that Blockvest's promotional materials, which included a website, a white paper posted online, and social media accounts touting its BLV token, constituted an offer of unregistered securities containing materially false statements.

“For those who thought that Blockvest was a blow to the SEC, no one could think that any more,” said David Zaslowsky, a partner in the New York office of Baker McKenzie who edits the firm's blockchain blog, which has been following the case.

SEC officials didn't respond to a request for comment.

In its complaint, the SEC alleged that the company and its founder, Reginald Buddy Ringgold III, falsely claimed the Blockvest ICO had sign-off from various agencies, including the SEC and the U.S. Commodity Futures Trading Commission. The SEC also claimed Ringgold promoted Blockvest on the internet by claiming approval from an agency called the “Blockchain Exchange Commission,” which featured a logo similar to the SEC seal and the same address as SEC headquarters. No such agency exists.

Ringgold and Blockvest conceded that “mistakes” were made in the offering, but claimed their BLV tokens were only designed for testing the company's platform and that its investors were friends and family. The company agreed not to move forward with any future offering without giving the SEC 30 days' notice, a point that Curiel cited when finding there was little risk of a securities violation going forward in his initial preliminary injunction ruling last year.

But in Thursday's ruling, Curiel pointed out that Ringgold's lawyers at Corrigan & Morris in Los Angeles have since asked to withdraw from the case citing “a complete breakdown in the attorney-client relationship.” Ringgold, they wrote, had asked them to file court papers that “fall far short of the professional standards” that could lead to sanctions against the firm. Their client then attempted to file them himself when they refused, but was rejected by the court clerk. Curiel cited that conduct and Ringgold's current lack of counsel in Thursday's opinion. (The judge also granted the lawyers' motion to withdraw.)

“In light of the Court's order granting defense counsel's motion to withdraw as counsel, the Court has concerns whether Defendants will resume their prior alleged fraudulent conduct,” Curiel wrote.

Ringgold did not respond to an email sent to his LinkedIn page.

C. Neil Gray, a partner at Reed Smith in New York who has been following the case, said he doesn't think he's seen the SEC approach—focusing on the marketing and offering documents rather than the actual sale—in prior ICO cases. “We may see that more going forward,” he said.

But he stressed that the case is still in an early phase. “It's a decision on preliminary injunction.” Gray said. “All it demonstrates is that the SEC has made a prima facie case that it's entitled to a preliminary injunction.”

Fenwick & West's Mike Dicke, previously the top enforcement lawyer in the SEC's San Francisco regional office, said that he expects to see defendants continue to push back against the agency's determination that certain ICOs are securities offerings.

“The 'Is it a security analysis?' vexes even the most seasoned securities lawyers,” Dicke said. “It's not straightforward analysis.”

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