UPDATE | May 23, 2018:
Jay Clayton, chairman of the US Securities and Exchange Commission (SEC), yesterday endorsed NASAA's Operation Cryptosweep. In a statement, Clayton said:
"I applaud our fellow regulators in the United States and Canada who are coordinating and participating in efforts to police fraud in the Initial Coin Offering (ICO) markets. These state and provincial regulators play a critical role in protecting Main Street investors."
He also noted the SEC's recent launch of a fake ICO website intended to educate the public and urged people to utilize the SEC's "list of relevant statements, investor alerts and bulletins, announcements of enforcement actions, and other helpful materials" when making decisions about investment products.
ORIGINAL | May 21, 2018:
On Monday, the North American Securities Administrators Association (NASAA) announced a coordinated investigation into fraudulent cryptocurrency investments. The investigation, known as Operation Cryptosweep, began on May 1 and has already led to almost 70 separate investigations as well as 35 enforcement actions. More are expected.
"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 P. Borg, NASAA president and director of the Alabama Securities Commission, in a press release.
NASAA is composed of state and provincial securities regulators in Canada and the US whose mission is to "[protect] Main Street investors from fraud," according to its website. More than 40 state and provincial regulators are taking part in Operation Cryptosweep.
The operation comes after the creation of a NASAA task force in April that was charged with "investigations into ICOs and cryptocurrency-related investment products." NASAA's coordinated action includes raising public awareness of both. "Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution," Borg said.
The Texas State Securities Board is coordinating the sweep and has been active in the space since launching its own investigation last year. Texas alone has taken action against three companies as part of the sweep:
- Bitcoin Trading & Cloud Mining Limited (aka BTCRUSH), which used fake videos of server farms to lure investors into a cloud-based crypto mining scheme
- Wind Wide Coin, a crypto trading platform that used phony celebrity endorsements from Jennifer Aniston and others
- Forex EA & Bitcoin Investment LLC, which promised investors a $50,000 return on a $5,000 investment within three weeks