200+ Cases Being Investigated Under “Operation Cryptosweep”

Aided by multiple state and provincial securities regulators in Canada and the US, the North American Securities Administrators Association (NASAA) is carrying out more than 200 investigations on initial coin offerings (ICOs) and crypto-related investment vehicles. The agency also stated that the continuing investigations are a part of its initiative named “Operation Cryptosweep”, which targets dubious practices in the unregulated cryptocurrency sector.

NASAA, founded in 1919, claims to be the first international agency committed to the protection of investors from financial malpractices. The “Operation Cryptosweep” was launched back in April 2018 to clampdown on deceptive crypto related businesses and ICOs.

Joseph Borg, President of NASAA, stated that enforcement investigations were started after suspecting securities fraud. However, the agency soon identified that many projects were violating several state and provincial security laws. This includes the compulsory requirement for financial institutions to register a product before offering it to prospective investors.

All crypto firms are not shady

Borg, however, agreed that that “not every ICO or cryptocurrency-related investment is a fraud.” Still, he emphasized that investors and firms operating in crypto sector are subject to the provincial and state laws.

The NASAA President further stated that

“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.”

Borg cautioned investors to avoid trusting an ICO, which claims to be exempt from the prevailing securities laws, and appealed them to inform relevant authorities before committing their “hard-earned money” in cryptocurrency projects.

He further explained that all crypto related investment vehicles must be compulsorily registered with the appropriate regulatory authority for a procedural review. Borg believes that such a process will offer an additional layer of security for investors. Even then, according to Borg, there may be a few fraudulent projects which may creep through the regulatory process successfully.