May 22nd, 2018: According to a press release made by the North American Securities Administrators Association (NASAA) yesterday, May 21st, a “coordinated international crypto crackdown” has officially begun. A combination of regulators from both the United States and Canada opened investigations into a number of potential fraudulent investment activities being offered to investors. This most recent attempt at cracking down on fraudulent and scamming tactics in the industry is reportedly the largest coordinated activity to date by officials. The press release outlined that the coordinated efforts are geared towards cracking down on “fraudulent Initial Coin Offerings (ICOs), cryptocurrency-related investment products, and those behind them.”
The release included that NASAA members from over 40 jurisdictions throughout North America were involved in the launch of what’s being called “Operation Cryptosweep.” According to the release, the sweep has already resulted in 70 investigations and 25 pending and completed law enforcement actions since the beginning of May.
The latest attempts at stifling potentially fraudulent activities comes on the tail of a variety of other tactics regulators are using to bring safe financial practices to the cryptocurrency world. Just last week, the Securities and Exchange Commission (SEC) launched a parody ICO site to sell the “HoweyCoin” as an educational resource for potential investors. The point in the fake site was to help educate new investors about the ways scammers and fraudulent parties attempt to trick newcomers to the markets into investing into less-than-legitimate ICOs.
Prior to this, in February of 2018, the Commodity Futures Trading Commission (CFTC) announced their decision to start offering ‘bounties’ for anyone in the markets with information that could lead to the successful prosecution or law enforcement action against “Pump-and-Dump” groups acting nefariously in the markets. The CFTC wanted to start offering investors with information an alternative to participating in the illegal activities. If regulators can make it more profitable for market insiders to aid in the prosecution of pump-and-dump groups, then the idea is that they’ll be able to bring more down and add more legitimacy to the markets.
Now that the NASAA is getting involved after other attempts, it’s clear that regulators are taking the concern very seriously. That sentiment has been restated and reiterated by Joseph P. Borg, NASAA President and Director of the Alabama Securities Commision who commented in the official press release:
The persistently expanding exploitation of the crypto ecosystem by fraudsters is a significant threat to Main Street investors in the United States and Canada, and NASAA members are committed to combating this threat. 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.