it could be that the reason that happened, but there could be other reasons why, why china banned ICO, for now we only can just guess ..
ICO ban before any actual legal rulings for such things are made kinda makes sense, though. I think that a blanket ban is a bit overkill, but it makes sense to regulate crypto investments like that anyways, because it's obvious that the crypto users themselves cannot do this.
I think they wanted to calm the market down while they figure out how to regulate them. The speed at which the ICO bubble was inflating (therefore the speed at which Chinese investor money was evaporating into offshore, unregulated securities markets) was alarming.
There has been talk from Chinese officials that suggests that this is all temporary. China expects to be a global financial hub; it seems very unlikely that they would institute a blanket ban permanently.