U.S. Regulators Talk about Operation CryptoSweep for Reducing Scam ICOs
Initial Coin Offerings have rapidly managed to become an amazing method for start-ups to raise capital for their innovative projects. Unfortunately, due to regulatory uncertainty, lack of standardization, and general lack of know-how by the public, numerous fraudulent ICOs have plagued the market.
Recent reports indicate that the North American Securities Administrators Association (NASAA) in collaboration with the Commodity Futures Trading Commission (CFTC) will be starting ‘Operation CryptoSweep’ – an enforcement action that targets, and aim to reduce the number of scam ICOs.
Chairman of CFTC, Christopher Giancarlo, mentioned that: “We applaud NASAA on a new program [Operation Cryptosweep] being announced today. It complements the CFTC’s on-going virtual currency investigations with NASAA members.”
It is important to keep in mind that earlier this week, at a NASAA-hosted event, U.S. and Canada regulators, mentioned that 70 investigations onto ICOs are currently in action. So far, it is believed that NASAA employees from 40 jurisdictions have actively contributed to the Cryptosweep operation – therefore, 70 investigations have been started, whereas 35 enforcement actions have been completed, or are still pending.
Given the recent announcements, it is likely that the operation will continue. At this time, it is not clear what tools are used for the investigation, granted that investors only find out about a fraudulent ICO after it has already ran away with the capital.
Despite their on-going investigations, NASAA is well-aware that not all ICO are fraudulent – thus, it warned the public that it is best to remain highly-vigilant when exploring this market. Due to its unregulated nature, and the use of cryptocurrencies, it is difficult to protect users if they’ve already invested.
Based on everything that has been outlined so far, the NASAA is therefore doing a good service to the ICO market, by actively looking for, and removing fraudulent investment schemes.