NASAA warns fraudsters continue their attempts to capitalize on interest in cryptocurrencies

Maria Nikolova

Operation Cryptosweep has resulted in the opening of more than 330 inquiries and investigations relating to ICOs and cryptocurrencies.

The North American Securities Administrators Association (NASAA) has released its annual enforcement report based on 2018 Data, including responses from 50 states and the District of Columbia.

NASAA reported that state securities regulators conducted 5,320 investigations in 2018 and took 2,067 enforcement actions overall. These actions led to more than $558 million in restitution ordered returned to investors, fines of $490 million and criminal relief of 1,753 years, including incarceration and probation.

Within the licensed securities industry, NASAA’s U.S. members reported a five-year high in the proportion of enforcement actions involving investment adviser investment adviser firms. For the 2018 survey year, states reported that 17% of their actions involved investment adviser firms, more than any other category of registered individuals. That share has nearly doubled since 2014, when these firms represented only 9% of respondents.

Looking ahead, NASAA’s US members again reported an increase in investigations of unregistered individuals, to no fewer than 700 in the 2018 survey year. This number has risen for three years in a row, more than doubling from 335 in 2015. NASAA warns that, given the ongoing state enforcement efforts against fraudulent activity involving cryptocurrencies, it would not be surprising to see a sustained high level of investigations and actions against unregistered individuals and firms in the coming years.

NASAA also noted the importance of Operation Cryptosweep, which was launched back in the spring of 2018. The Association says that bad actors continue their attempts to capitalize on widespread interest in cryptocurrencies and blockchain technology. In April 2018, NASAA organized an international task force consisting of more than 40 state and provincial securities regulators. It is this task force that initiated Operation Cryptosweep. Task force members have opened more than 330 inquiries and investigations and brought more than 85 enforcement actions relating to ICOs and cryptocurrencies.

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