“Operation Cryptosweep” has resulted in nearly 70 inquiries and investigations and 35 enforcement actions related to ICOs or cryptocurrencies since the beginning of May.
Virtual currencies continue to be in the focus of regulatory attention. The North American Securities Administrators Association (NASAA) today announces one of the largest coordinated enforcement actions by state and provincial securities regulators in the United States and Canada to clamp down on fraudulent Initial Coin Offerings (ICOs), cryptocurrency-related investment products, and the entities behind them.
The coordinated effort, code-named “Operation Cryptosweep”, saw the participation of NASAA members from more than 40 jurisdictions throughout North America. The operation to date has resulted in nearly 70 inquiries and investigations and 35 pending or completed enforcement actions related to ICOs or cryptocurrencies since the start of May.
Joseph P. Borg, NASAA President and Director of the Alabama Securities Commission, noted that:
“The actions announced today are just the tip of the iceberg” and added that the task force also found approximately 30,000 crypto-related domain name registrations, the vast majority of which appeared in 2017 and 2018.
In April 2018, NASAA established a task force of its member state and provincial securities regulators to launch a coordinated series of investigations into ICOs and cryptocurrency-related investment products. Regulators identified many cryptocurrency-related products and as part of its work, the task force identified hundreds of ICOs in the final stages of preparation before being launched to the public. These pending ICOs were advertised and listed on ICO aggregation sites to attract investor interest. Many have been examined and some were determined to warrant further investigation. A number of these investigations are ongoing and others resulted in enforcement actions announced today.
Let’s recall that US and Canadian authorities often collaborate in their enforcement actions against virtual currency scams. One of the latest examples concerns a case launched by the US Securities and Exchange Commission (SEC) against PlexCorps. In February this year, the US regulator moved the New York Eastern District Court to issue a Request for International Judicial Assistance to the Quebec Superior Court, District of Quebec City in the Province of Quebec. In particular, the SEC is requesting the assistance of that Court to compel the attendance of witnesses at oral depositions and the production of documents. The documents requested from defendants Lacroix and Paradis-Royer include all communications or documents concerning any contacts between the defendants and the United States with respect to PlexCorps and the PlexCoin ICO.