“Operation Cryptosweep” Yields Over 200 Investigations of Suspicious ICO and Crypto Projects

Initial coin offering (ICO) has become a popular way of raising capital in recent years, and alongside the myriad of legitimate companies that actually try to build and develop products and services, there has also been a precipitous rise in fraudulent ICO ventures. Consequently, back in a April a new American-Canadian joint task force – the North American Securities Administrators Association (NASAA) – launched “Operation Cryptosweep,” designated to uproot ICO scams and initially targeting close to 70 suspicious ICO projects.

Now the NASAA updates that the number of active investigation has already jumped to over 200, and that the operation has produced 46 enforcement actions by August 28. In addition, the NASAA President and Alabama Securities Commission Director Joseph P. Borg delivered a subtle warning to people/companies that initiate ICOs and crypto investments.

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. 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 also encourages creators and promotors of ICOs to carefully examine their status and register as a security if needed – this registration can constitute as a shield for potential investors since the process incorporates a preliminary regulatory probe. In any case, Borg urges investors to conduct their due diligence prior to getting into any ICO or crypto project.

It might come as a surprise to some legitimate ICO and crypto project creators, but these kinds of regulatory task forces can actually help them; a great deal of investors currently stay away from crypto ventures since the many frauds in the field portray everything in the area as too shady and fishy. Accordingly, cleaning up the crypto world can certainly attract a much larger pool of investors.

For more information about Operation Cryptosweep, the NASAA keeps an online log of its regulatory activity against crypto projects, which includes access to consent orders, cease and desist orders, information demand letters, and investor alerts.

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