Can a player in a cash game cash-in some chips and continue playing at the same table with less chips at stake?

I've understood that a player is not allowed to protect chips in that way. I'm asking because I was playing a low stakes no limit holdem cash game after a home tourney and one of my buddies cashed in some of his chips and kept on playing. I asked him to keep the bills on the table because I felt I had a right to have a chance to win them back. I want to know who was wrong before it comes up again between us.

Mucknut.