Multiple state securities regulators in the US revealed yesterday that they are taking part, along with 40 other North American state and provincial regulators, in a coordinated crackdown on fraudulent cryptocurrency projects.
“The actions announced today are just the tip of the iceberg,” stated Joseph P. Borg, NASAA President and Director of the Alabama Securities Commission.
“Operation Cryptosweep” began May 1st and has reportedly resulted in 70 enforcement actions so far. The sweep is being coordinated by the North American Securities Administrators Association (NASAA), the group that represents state and provincial securities regulators.
“The actions announced today are just the tip of the iceberg,” said Tennessee Department of Commerce & Insurance (TDCI) Assistant Commissioner Frank Borger-Gilligan in a TDCI release.
Julie Mix McPeak, TDCI Commissioner added, “Fraudulent activity involving ICOs and cryptocurrency-related investment products is a significant threat to Main Street investors in Tennessee.”
A NASAA task force reportedly found over 30,000 online domains related to cryptocurrency products, the vast majority of them new.
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Other sources have estimated a total of 1800 ICOs (Initial Coin Offerings) circulating.
A release from the Texas State Securities Board, states that that agency, “spearhead(ed)… (and) took the lead in organizing, managing, and coordinating the NASAA sweep”:
Texas Securities Commissioner Travis J. Iles has entered three enforcement orders since the start of the sweep, bringing to 10 the number of actions the State Securities Board has taken against illegal or fraudulent cryptocurrency promoters since Dec. 20, 2017. Texas was the first state regulator to issue an order against a promoter offering cryptocurrency-related investments.
The release adds that Texas embarked on a four-week investigation into cryptocurrencies last December and is presently conducting 60 investigations of its own into, “suspect offerings targeting Texas residents.
Joseph Rotunda, Director of the Enforcement Division of the Texas Securities Board and the Vice-Chair of the Enforcement Section for NASAA, stated in the Texas release, “Although the task force’s work is far from complete, my suspicions have already been confirmed. The market for cryptocurrency investments is saturated with widespread fraud.”
Fraudulent ICO websites are know to have obscured owner identities, used fake location data, downplayed risks and and made promises of implausible returns. A number of laughable examples of slick ICO websites have used celebrity likenesses to represent company principles.
The TDCI stated, “a critical component of ‘Operation Cryptosweep’ is raising public awareness,” and the agency plans to issue consumer alerts all this week to, “urge caution when investing in cryptocurrencies.”
“Not every ICO or cryptocurrency-related investment is fraudulent,” said Borger-Gilligan, “but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution.”
NASAA has posted multiple warnings about initial coin offerings and cryptocurrency in general. Sections of their website include “be cautious of the crypto investment craze” and “get in the know of ICOs“.
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