In May 2018, Operation Cryptosweep was launched with an aim to protect investors and prevent them from falling prey to fraudulent ICO schemes or other crypto-related investment products. This international task force aims to target the securities violations in the crypto industry was started by the North American Securities Administrators Association (NASAA), a body formed by a joint regulatory force of the U.S., Canada, Puerto Rico, the U.S. Virgin Islands and Mexico.
In an official press release on Tuesday, August 28, NASAA announced that Operation Cryptosweep has now “more than 200 active investigations” done by the provincial-level and state agencies in the U.S. and Canada itself. Over the last few months, the Operation Cryptosweep has initiated 47 different enforcement actions while unearthing violations relating to securities fraud to startups misleading investors about their products prior to launch.
Operation Cryptosweep has also received support and praise from Jay Clayton, the U.S. Securities and Exchange Commission (SEC) Chairman. The press release quoted Joseph P. Borg, NASAA President and Alabama Securities Commission Director, saying:
“State and provincial securities regulators are committing significant regulatory resources to protect investors from financial harm involving fraudulent ICOs and cryptocurrency-related investment products and also are raising awareness among industry participants of their regulatory responsibilities.”
He further added:
“While not every ICO or cryptocurrency-related investment is a fraud, it is important for individuals and firms selling these products to be mindful that they are not doing so in a vacuum; state and provincial laws or regulations may apply, especially securities laws. Sponsors of these products should seek the advice of knowledgeable legal counsel to ensure they do not run afoul of the law. Furthermore, a strong culture of compliance should be in place before, not after, these products are marketed to investors.”
Additionally, Borg also asked to do thorough groud homework on their part while purchasing new digital tokens in the market. He also asked investors to remain particularly alert in projects wherein promoters “claim their ICO offering is exempt from securities registration but do not ask about your income, net worth or level of investing sophistication.”
Texas’ state security board has been the most active in finding and halting the fraudulent schemes “in which companies claimed to have raised billions of dollars from investors.” Joseph Rotunda, director of enforcement at the Texas State Securities Board, said that the agency has unearthed “staggering” amount of illegal activity in the digital currency space by pulling-in prominent personalities as a part of their marketing stunt.
“The work is far from complete, but state and local regulators will continue to conduct sophisticated investigations and bring appropriate enforcement actions to promote confidence and security in the market for investments tied to cryptocurrencies,” Rotunda concluded.