The North American Securities Administrators Association, a user protection institution, announced today that they were coordinating investigations with state securities regulators targeting misleading and fraudulent crypto-related businesses, in an operation called Cryptosweep, according to information taken from the Washington Post.
The North American Securities Administrators Association (NASAA), is one of the oldest institutions created with the purpose of protecting investors from dubious offers and scams, and provide legal support in those areas. Founded in 1919, it is comprised of securities administrators who work at a state level and provide investment advice to possible security contracts investors.
Members of the NASAA started to note an increase of crypto-related internet domains since December last year when bitcoin prices reached more than $17,000. And, aware of this fact, they started planning what they called operation Cryptosweep: members of the association would pose as regular people to make inquiries about the crypto-related offerings that they considered suspicious or misleading. In this heavy endeavor, they found out pretty interesting things: initial coin offerings that offered astounding benefits, like revenues of more than 4 percent daily and testimonies that showed pictures of known celebrities with different names (Price Charles, Jennifer Anniston, amongst others) supporting those companies.
These issues found by the NASAA members are included in the lists of “red flags” that was published in the page of the Securities and Exchange Commission (SEC) regarding fraudulent Initial Coin Offerings characteristics. Then, they started issuing cease and desist letters to most sites that were determined to be violating state laws with their behavior. This resulted in more than 70 investigations being opened to unregistered security lenders. Joseph Borg, president of the NASAA, stated:
“WE’RE SEEING WHAT’S BEING PROMOTED TO INVESTORS. AND THEN WE’RE TAKING THE NEXT STEP AND THEN WE’RE FINDING OUT WHETHER THEY’RE COMPLYING WITH SECURITIES LAWS”
Initial Coin Offerings have been under the scrutiny of the SEC since early this year at a federal level, enduring subpoenas and information requisition from this organization. And now we know that state-level regulators are turning their eyes on the problem too.