US-Canada launch ‘Operation Crypto-Sweep’

Securities regulators from the United States and Canada in April launched the largest coordinated cryptocurrency crackdown, US officials announced Monday.

“The actions we’ve taken to date are just the tip of the iceberg,” said Joe Borg, President of the North American Securities Administrators Association (NASAA) and Director of the Alabama Securities Commission.

The binational task force has launched 70 investigations as part of “Operation Crypto-Sweep”, with 35 already facing completed or pending enforcement actions, according to Reuters.

The regulators are targeting unregistered securities offerings that promise lucrative returns without adequately informing investors of the risks.

The move comes after a Wall Street Journal analysis of 1,450 cryptocurrency offerings that revealed various scams.

This also highlighted the existence of at least 271 initial coin offerings with red flags that include plagiarised investor documents, promises of guaranteed returns on investment, and missing or fake executive teams.

Securities regulators from at least 40 states and provinces form part of the massive operation, which according to Texas State Securities Board Director Joseph Rotunda “is far from complete.”

The Texas State Securities Board sent a warning letter to the UK-based BTCrush earlier this month, saying the company was violating securities laws and misleading investors.

BTCrush’s marketing team posted videos showing the interior and workings of what they claimed were three fully-operational mining farms.

But the Texas regulator said the footage had actually been taken from publicly available stock video.

Cryptona revealed on their website that regulators from Massachusetts are also joining in the clampdown. The secretary of the Commonwealth, William Francis Galvin, said the task force has detected about 30,000 cryptocurrency related domain name registrations, the majority of which were registered late 2017 when Bitcoin soared to nearly USD$20,000.

Galvin stressed that, “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.”

He added that fraud involving, “ICOs and cryptocurrency-related investment products is a serious threat to Massachusetts investors.”