U.S. and Canadian Regulators Investigating Crypto Scams

The North American Securities Administrators Association (NASAA) just announced “Operation Cryptosweep,” one of the largest coordinated enforcement actions by U.S. and Canadian regulators to crackdown on fraudulent Initial Coin Offerings (ICOs).

The task force was convened in April 2018 and includes members from more than 40 jurisdictions throughout North America and has resulted in nearly 70 inquiries and investigations and 35 pending or completed enforcement actions related to ICOs or cryptocurrencies since the beginning of May.

Joseph P. Borg, NASAA president and director of the Alabama Securities Commission, said “The actions announced today are just the tip of the iceberg,” Borg also noted that the task force had found approximately 30,000 crypto-related domain name registrations, most of which appeared in 2017 and 2018.”

An important part of the Cryptosweep program is to raise public awareness of the potential risks associated with ICOs and cryptocurrency, while also encouraging the public to come forward and alert the agency to potential scams.

Borg commented, “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.”

“Operation Cryptosweep contributes to our ongoing efforts to raise awareness about potentially fraudulent activity involving cryptocurrency products,” said Leslie Byberg, executive director and CAO of the Ontario Securities Commission. “To avoid investment fraud, investors should always check that they are dealing with a registered individual or firm, and should carefully consider the risks associated with investing in this novel space.”

Robin Jacobs, who is with the Wisconsin Division of Financial Institutions (DFI), also part of the task force, said these types of schemes haven’t reached the state on a large scale but are rampant across the rest of the U.S. and Canada.

“There are very few legitimate ways to make 10, 15, 20 percent off your investment,” she said. “And if they’re offering you guaranteed high returns, do not give them your money.” Jacobs continued, “Regulators are on top of this and we’re going to go after them for misrepresenting these investments to the public and essentially stealing people’s investment money.”

CryptoSecure, a company that recently announced John McAfee was joining as a senior strategic advisor, is one of the companies just served with a Cease and Desist letter by NASAA as part of the sweep. Other companies who received similar letters include Digital Ticks, Leverage, Power Mining Pool, ThinkCoin, Ubcoin and many more.