Regulators in U.S. and Canada Participate in NASAA’s Coordinated ICOs Crackdown

Several financial regulators have announced their support for an international crackdown on fraudulent ICOs and cryptocurrency-related activities, which was recently coordinated by the North American Securities Administrators Association (NASAA).

As part of NASAA’s crackdown, more than 40 state and provincial securities regulators in the U.S. and Canada‎ issued a series of consumer alerts to raise public awareness and urge caution when investing in token sales. In addition, nearly 70 inquiries and 35 ICO-related enforcement actions have been announced during the last three weeks.

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Many NASAA members also are conducting public outreach initiatives to warn investors in their jurisdictions of the risks associated with ICOs and cryptocurrencies.

Last month, NASAA organized a task force to launch investigations into ICOs and cryptocurrency-related investment products. Those investigations have identified, examined and resulted in the enforcement actions against hundreds of initial coin offerings. These ICOs were advertised and listed on aggregation sites to attract investor interest.

NASAA’s task force also found more than 30,000 crypto-related domain name registrations, the vast majority of which appeared in 2017 and 2018.

‎Confronted with North American watchdogs intensifying scrutiny of crypto fund-raising, many startups are moving their businesses to locations more welcoming such as Malta, Switzerland and Eastern Europe.

Dozens of entrepreneurs have already flocked to Zug, an affluent municipality in Switzerland, which hosted last year most of largest ICOs, raising a total of over $700 million.

“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,” said Joseph Borg, NASAA President and Director of the Alabama Securities Commission.

He added: “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.”