NASAA Steps up its Cryptocurrency Probe in Canada and the US

NASAA, The North American Securities Administrators Association has released a press statement announcing that there are over 200 active investigations on cryptocurrency-related investment products and ICOs in the United States and Canada.

Operation Cryptosweep: Sanitizing the North American Cryptocurrency Space

In the press statement issued yesterday on its official website, NASAA said that state and provincial securities regulators in the US and Canada are involved in over 200 active investigations of ICOs and cryptocurrency–related investment products. These investigations are part of extensive efforts stemming from “Operation Cryptosweep”, which so far has resulted in 46 enforcement actions involving ICOs and crypto-related investments.

According to Joseph B. Borg, NASAA president and the director of the Alabama Securities Commission, not all ICOs are fraudulent, but firms dealing in ICO projects and cryptocurrency-related investment products should ensure compliance with existing securities laws:

“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. A strong culture of compliance should be in place before, not after, these products are marketed to investors.”

Joseph Borg also advised investors to carry out due diligence when purchasing cryptocurrencies and other digital tokens, saying,

“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…Do your homework and contact your state or provincial securities regulator with any concerns.”

Operation Cryptosweep is a coordinated series of enforcement actions by numerous securities regulators on fraudulent ICOs and cryptocurrency investments. The operation first commenced in May 2018.

This concerted regulatory effort is aimed at suspected securities fraud, but regulators are also finding cases of other violations of securities laws, such as failing to properly register a product before offering to such a product to investors.

Separate from the enforcement actions of NASAA, the US Securities and Exchange Commission is probing cryptocurrency exchange firms in the country and weighing in on the growing debate on whether digital tokens classify as securities.