International Task Force Launches ‘Operation Cryptosweep’ Currently Investigating Security Violations in the Crypto Sphere

200 initial coin offerings (ICOs) and investment products are being looked into by an international task force investigating securities violations in the nascent cryptocurrency sector.

North American Securities Administrators Association (NASAA), launched back in May 2018 “Operation Cryptosweep”, and the task force has been busy with 47 ICOs and firms providing cryptocurrency investment products in the U.S. and Canada having actions taken against them. Operation Cryptosweep has found approval in Jay Clayton, Chairman for Securities and Exchange Commission (SEC).

NASAA President and Alabama Securities Commission Director Joseph P. Borg commented:

“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.”

Borg 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.”

Out of the 47 or the enforcement actions, 11 were imposed by regulators in Texas, with the State Securities Board claiming that it has stopped scams “in which companies claimed to have raised billions of dollars from investors.”

Joseph Rotunda, director of enforcement at the Texas State Securities Board, reported in an emailed statement that the probe discovered an immense amount of illicit activity in the crypto sphere, examples include ICOs which used false advertising with the likeness of actress Jennifer Aniston and Supreme Court Justice Ruth Bader Ginsburg in order to spread their marketing materials to investment fundraisers which deceptively used stock videos show as if the company was operating three cryptocurrency mining farms.

Rotunda concluded:

“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.”