US and Canada’s so-called “Operation Cryptosweep” has resulted in more than 200 investigations into initial coin offerings (ICOs) and crypto-related investment products. The operation has also seen regulators issuing 46 enforcement actions.
North American Securities Administrators Association (NASAA) President Joseph P Borg says the investigations have unveiled several crypto-related operations that are allegedly a violation of state and provincial securities laws. He explains those violations include failure to register a product before offering it to the public.
Not all ICOs are fraud
“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,” said Borg.
“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.”
READ MORE: US-Canada launch ‘Operation Crypto-Sweep’
Borg, who is also the Alabama Securities Commission Director, says that the operation, which was launched in May of this year and targeted suspicious cryptocurrency investment tools, is arguably the largest joint investigation by state and provincial authorities.
Registered investment tools may be fraudulent
The NASAA official highlights the fact that even registered investment products can turn out to be fraudulent. Therefore, it recommends investors to carry out their own due diligence before putting any money into ICOs or crypto projects.
The operation has so far discovered nearly 30,000 crypto domain names, the majority of which were registered when the price of Bitcoin (BTC) peaked last year.