The North American Securities Administrators Association (NASAA) announced probably the largest crackdown on Initial Coin Offerings (ICOs), cryptocurrency-related investment products and exchanges.
“The persistently expanding exploitation of the crypto ecosystem by fraudsters is a significant threat to Main Street investors in the United States and Canada, and NASAA members are committed to combating this threat,” said Joseph P. Borg, NASAA President.
The coordinated efforts have resulted in close to 70 investigations and 35 enforcement actions to date, but the plan of action also includes reaching out to investors to inform them about the risks associated with ICOs and cryptocurrencies in general.
“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money.” said NY former Attorney General Schneiderman, who launched a formal inquiry into cryptocurrency exchanges as part of the Virtual Markets Integrity Initiative.
As part of the Initiative, questionnaires were sent to many cryptocurrency exchange platforms asking to disclose information falling within eight major topic areas:
I. Ownership and Control
II. Basic Operations and Fees
III. Trading Policies and Procedures
IV. Outages and Other Suspensions of Trading
V. Internal Controls
VI. Privacy and Money Laundering
VII. Protection Against Risks to Customer Funds
VIII. Written Materials
The Investor Protection Bureau of the Office of the Attorney General sent letters to at least thirteen virtual currency trading platforms including Coinbase, Inc. (GDAX); iFinex Inc. (Bitfinex); Payward, Inc. (Kraken); Bittrex, Inc.; Circle Internet Financial Limited (Poloniex LLC); and Binance Limited.
While the cryptocurrency exchanges received mostly Information Demand Letters, other actions taken included Cease and Desist Orders that targeted companies such as Wind Wide Coin Inc. who was allegedly using misleading, deceptive statements, and fake celebrity endorsements to attract investors as you can see in the screenshot below:
Texas State Securities Board issued a Cease and Desist Order to Wind Wide Coin (see Notice Order No. ENF-18-CDO-1764 here) and the site is currently "Down for Maintenance".
Although many in the cryptocurrency space are opposed to government regulation I feel that this initiative was long overdue. Once the scammers are filtered out, the tarnish and "dark cloud" over cryptocurrency will start to dissipate, opening the door for banks and institutional money to enter the cryptocurrency market. This would allow for a money flood that could bring the prices back up, or even better to new all-time highs.
As a blockchain enthusiast and cryptocurrency investor myself, I certainly applaud this approach that I believe will only help blockchain technology to thrive.
Do you agree that operation Cryptosweep will benefit cryptocurrencies and blockchain technology? Share why (or why not) in the comments and keep HODLING!