The Securities and Exchange Commission has filed a $100 million lawsuit against Canadian social-media startup Kik Interactive for selling unregistered tokens in one of the most high-profile cryptocurrency crackdowns yet.

The top financial watchdog in the U.S. accused Kik, which launched a digital currency to be traded within its messaging app, of conducting an illegal securities offering. The company's "Kin" token brought in more than $100 million in its 2017 offering.

"Companies do not face a binary choice between innovation and compliance with the federal securities laws," Steven Peikin, co-director of the SEC's Division of Enforcement, said in a press release.

The Kin tokens came on the market near the height of the initial coin offerings, or ICO, boom. Last year, the fundraising method brought in a total $12 billion in funding, according to estimates from Autonomous Next. Of that, one cryptocurrency called EOS brought in $4.2 billion while messaging app Telegram brought in $1.7 billion.

The gold rush was mostly driven by retail investors, which caught the attention of regulators who have repeatedly insisted that not registering tokens violates investor protection laws. Crypto entrepreneurs widely disagree, claiming that tokens should not be viewed by the same yardsticks as traditional stocks.

"This is the first time that we're finally on a path to getting the clarity we so desperately need as an industry to be able to continue to innovate and build," Kik founder and CEO Ted Livingston said in a statement to CNBC.

Livingston told the Wall Street Journal earlier this year that the company planned to fight the SEC's expected enforcement action. The company launched a crowdfunding campaign through to fight the SEC's crackdown. DefendCrypto.org claims to have raised $4.6 million so far.

In an ICO, coins or tokens are sold as a form of crowdfunding, or raising small amounts from a large number of investors. Instead of dividends or voting rights, cryptocurrencies often promise access to a network or a future service. But they're often backed by an abstract idea or in some cases, nothing at all. The SEC accused Kik of marketing tokens as an investment opportunity and telling investors that increased demand for its "Kin" cryptocurrency would drive up the value. The company also allegedly said it would introduce tokens as a form of payment in its messaging app, and build a system to reward other companies that adopt the cryptocurrency. At the time of the ICO though, the SEC claimed that none of that existed.

At one point in January 2018, the Kin cryptocurrency reached a market capitalization of $987 million, according to CoinMarketCap.com. It's now worth about $24.5 million, marking a 97% drop.

Last June, SEC Chairman Jay Clayton reiterated that the agency won't be updating the rules when it comes to defining this new digital asset class. Bitcoin and ether are the only cryptocurrencies the SEC has explicitly said are exempt from securities law. All other initial coin offerings constitute securities, and as Clayton said, "If it's a security, we're regulating it."

"We are not going to do any violence to the traditional definition of a security that has worked for a long time," Clayton told CNBC last year. "We've been doing this a long time, there's no need to change the definition."