State and provincial securities regulators in the U.S. and Canada have probably conducted one of the largest coordinated crackdowns on fraudulent Initial Coin Offerings (ICOs), cryptocurrency-related investment products, and the people behind them.
The crackdown dubbed "Operation Cryptosweep" was conducted in coordination with the North American Securities Administrators Association (NASAA), with 44 jurisdictions participating from the U.S. and Canada.
NASAA organized a task force of its member state and provincial securities regulators in April 2018 to begin a coordinated series of investigations into ICOs and crypto-related investment products after regulators systematically identified the scamsters and fraudsters.
Since the beginning of May, the crackdown has resulted in more than 70 inquiries and investigations and 35 pending or completed enforcement actions related to ICOs or cryptocurrencies. The inquiries, investigations and enforcement actions are ongoing and many more are to follow.
Some of these perpetrators have been issued temporary or permanent "Cease and Desist Orders" as well as some have been issued show cause notices.
"Despite a series of public warnings from securities regulators at all levels of government, cryptocriminals need to know that state and provincial securities regulators are taking swift and effective action to protect investors from their schemes and scams," said Joseph Borg, NASAA President and Director of the Alabama Securities Commission.
Borg urged investors to approach ICOs or crypto-related investment products with extreme caution, adding that not every one of these is fraudulent.
He noted that a critical component of "Operation Cryptosweep" is raising public awareness of the risks associated with ICOs and crypto-related products. Many NASAA members also are conducting public outreach initiatives to warn investors in their jurisdictions of the risks associated with these products.
The current actions by regulators are in addition to more than a dozen enforcement actions previously undertaken by NASAA members regarding these types of products.
"The actions announced today are just the tip of the iceberg," Borg said.
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