NASAA “Cryptosweep” Leads to Over 200 Investigations in US and Canada

The North American Securities Administrators Association (NASAA), an investor protection agency, announced this Tuesday that more than 200 investigations involving cryptocurrency-related investment products and initial coin offerings (ICOS) are underway in the United States and Canada.

The investigations stem from an initiative, launched by the NASAA in May of this year, termed “Operation Cryptosweep.” Yes, that does sound like something from an Arnold Schwarzenegger film but this has nothing to do with robots from the future fighting one another.

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Instead, the investigation has brought together a number of different regulators from across Canada and the USA in an effort to crack down on criminal activity in the cryptocurrency industry. Thus far, the operation has resulted in 47 enforcement actions against firms and individuals operating in the nascent industry.

NASAA clamps down on fraudsters

Most of our readers will likely be familiar with cryptocurrency by now. ICOs on the other hand are a slightly less well-known part of the ongoing cryptocurrency craze. They act in a very similar manner to initial-public-offerings, with firms selling their own tokens in order to raise funds for their business.

As you can imagine, in such a wild-west style market, this has left room for some less than scrupulous actors. ICO scams, in a variety of forms, have popped up repeatedly over the past few years.

Operation Cryptoswift seems to have been intended, in part, to deal with such scammers. Indeed, Joseph Borg, NASAA’s president, said on Tuesday that the operation was partly designed to “protect investors from financial harm involving fraudulent ICOs and cryptocurrency-related investment products.”

Outside of this, and on a much more banal level, there is an ongoing argument as to whether or not cryptocurrencies, and ICOs in particular, should be classified as securities. Were they to be, that would mean companies would be subject to a broad range of regulatory requirements.

On a positive note, trading registered securities means traders are subject to some consumer protections. Nonetheless, the NASAA still admits that some registered securities are fraudulent.

“Be cautious when dealing with promoters who claim their ICO offering is exempt from securities registration but do not ask about your income, net worth or level of investing sophistication,” Borg said. “Do your homework and contact your state or provincial securities regulator with any concerns before parting with your hard-earned money – afterwards may be too late.”