NASAA Updates Coordinated Crypto Crackdown in “Operation Cryptosweep.”

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NASAA Updates Coordinated Crypto Crackdown in “Operation Cryptosweep.”

By Dave Brang
August 28th, 2018

The continued investigation by the North American Securities Administrators Association reports today of 200 Initial Coin Offerings (ICOs) under active investigation.

Here is the NASAA's update on progress made as a result of their efforts to reign in fraudulant, regulation dodging, or predatory practices plauging the space. 


I'm unsure it's reasonably refuted the primary road block to adoption of existing and traded Blockchain projects is a lack of Regulation and oversight in the space. With many Businesses confused and unsure of the future of any given project, I believe it's reasonable to adopt a “wait and see” position in regards to adoption. Further yet, who could blame them with the constant headlines being a mix of beneficial innovative technology, negative opinion pieces, fraud, thefts, hacks, volatility swings, and of course the polarized projections of how regulation will effect the ecosystem? I'd imagine there's a fair amount of potential beneficiaries of the tech who've already become overwhelmed by the conflicting reports enough to simply tune them out while focusing on important day to day operations with more straight forward problems and solutions than an entirely new technology sector they don't understand.

So far, the lack of hasty legislation imposing short sighted regulation is a rather positive environment for the future of Blockchain technology and potentially most cryptocurrencies as a transfer of value or store of wealth. One thing is clear, It's highly unlikely to see “cryptocurrency accepted here” as commonplace as a USD ATM in a Gas station in the US while we wait on sensible and effective consumer regulations and protections against the continuation of money laundering and black market trade. After all, a public ledger offers an improvement to Governments, trust, logistics systems, financial markets, and the flow of wealth in a fair and reliable way. Why would regulators want to jump right into more of the same and even step backwards in consumer protections?


Lets take a look at the NASAA's published update on in their efforts to reign in fraud, regulation avoidance, and other predatory practices plaguing the space.


WASHINGTON, D.C. (August 28, 2018) – The North American Securities Administrators Association (NASAA) today announced that more than 200 active investigations of Initial Coin Offerings (ICOs) and cryptocurrency-related investment products are currently underway by state and provincial securities regulators in the United States and Canada as part of NASAA’s ongoing initiative “Operation Cryptosweep.”

Since its launch in May, this ongoing coordinated regulatory focus has resulted in 46 enforcement actions involving ICOs or cryptocurrency-related investment products.

State and provincial securities regulators are committing significant regulatory resources to protect investors from financial harm involving fraudulent ICOs and cryptocurrency-related investment products and also are raising awareness among industry participants of their regulatory responsibilities,” said NASAA President and Alabama Securities Commission Director Joseph P. Borg.

Borg noted that while some of the enforcement investigations initiated as part of Operation Cryptosweep involve suspected securities fraud, regulators are finding many other potential violations of state and provincial securities laws, including failure to properly register a product before it was offered to investors.

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.”

If these products qualify as securities, they should be registered with the appropriate regulatory agencies or qualify for an exemption from registration. The registration process provides some protection for investors by subjecting the offering to regulatory review. But even registered offerings can be fraudulent. Investors therefore should perform their own thorough due diligence before investing in any ICO or concurrency-related product.

Be cautious when dealing with promoters who claim their ICO offering is exempt from securities registration but do not ask about your income, net worth or level of investing sophistication,” Borg said. “Do your homework and contact your state or provincial securities regulator with any concerns before parting with your hard-earned money – afterwards may be too late.”


Looking forward, it seems we'll be observing no shortage in headlines with prosecutions of projects which fail to comply with regulatory protections of consumers.

It's been no secret these events would take place and a meaningful portion of projects have preemptively taken action to comply with the long term success of their projects being an obvious agenda. It begs the question of the intentions of those who continue the game of cat and mouse as they campaign for financing their goals from anyone taking the risk of being an early adopter to begin with. It's clear the bull run of 2017 and the misguided expectation of easy gains already convinced many to make poor investment decisions resulting in some pretty terrible losses. Those more educated and familiar with financial markets realized the investment and trading gains of which reports lead to the entry and emotional fear of mission out. This is but one example of precisely why regulatory protections were developed to begin with. 

We'll be continuing to monitor and update our patrons as events develop and looking forward to sensible and responsible regulation, growth, and adoption of the technology we've come to support. There's certainly many obstacles ahead for the space to overcome. As it grows never forget to be diligent, objective, and critical of the information you make financial decisions on. After all, no one else will...