US and Canadian authorities are conducting a probe on unregistered securities and initial coin offerings. Offerings that promise high returns but do not warn investors of the risks involved are the subject of the investigations.
About 70 investigations are currently ongoing with about half of those facing enforcement action.
Several cease and desist letters are understood to have already been sent by regulators to operators using fake identities and addresses. Additional action will be taken against companies engaged in fraudulent activities, regulators have said.
“The actions we’ve taken to date are just the tip of the iceberg,” North American Securities Administrators Association (NASAA) president Joe Borg said.
A taskforce which was formed in April reports that about 30,000 domain names warrant an investigation.
Raise Awareness on Scams
Operation Crypto Sweep as it is called is also aimed at raising awareness on online scams. This as it emerged that the SEC set up a fake ICO website to warn investors.
Satis Group recently announced that 81% of ICOs are scams. “Crypto-criminals need to know that state and provincial securities regulators are taking swift and effective action to protect investors from their schemes and scams,” Borg said.
The regulator is now urging the public to come forward and report potential scams. The Securities and Exchange Commission has been cracking down on cryptocurrency businesses over the last few months. A number of subpoenas have been issued and arrests made.
Last month, Centra Tech cofounders Sohrab Sharma and Robert Farkas were charged by the SEC for offering unregistered securities. The project which had been endorsed by boxer Floyd Mayweather had raised $32 million.
The regulator also charged Longfin executives for illegal sale of shares. The SEC said the firm evaded mini-IPO rules. The company’s shares shot up dramatically after it acquired a cryptocurrency business.
$27 million allegedly in illegal profits from the sale unregistered stock was frozen. The company’s stock soared by about 2660% after it announced the acquisition of Ziddu, a cryptocurrency company with no revenue stream.
BitFunder founder Jon Montroll was also charged in February for running an unregistered securities exchange in which users were defrauded. 6000 bitcoins were lost in Montroll’s WeExchange after hackers tricked the system to credit them with bitcoins they did not earn.