State regulators launch 'Operation Cryptosweep' to crack down on fraud

NASAA announces series of investigations, enforcement actions in U.S. and Canada targeting shady initial coin offerings and cryptocurrency products

May 21, 2018 @ 2:29 pm

By InvestmentNews

In a coordinated effort among its member regulators, the North American Securities Administrators Association has launched a series of enforcement actions by state and provincial securities officials in the United States and Canada to crack down on fraudulent initial coin offerings (ICOs), cryptocurrency-related investment products and those behind them.

Dubbed "Operation Cryptosweep," the effort by NASAA members from more than 40 jurisdictions has resulted in nearly 70 inquiries and investigations and 35 pending or completed enforcement actions related to ICOs or cryptocurrencies since the beginning of May. The coordinated effort began in April.

(More: Matt Hougan on exploring frontiers of cryptocurrency)

NASAA said its members are conducting additional investigations into potentially fraudulent conduct that may result in more enforcement actions. These actions are on top of more than a dozen enforcement actions previously undertaken by NASAA members regarding these types of products.

NASAA said a critical component of its effort is raising public awareness of the risks associated with ICOs and cryptocurrencies.

"Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution," said Joseph P. Borg, NASAA president and director of the Alabama Securities Commission.

(More: Why cryptocurrency could be your worst tax nightmare)

Among the state and provinces that have brought enforcement actions in the effort are Alabama, British Columbia, Colorado, Massachusetts, Missouri, New Jersey, New York, North Carolina, Nova Scotia, Quebec and Texas.

In a statement, Massachusetts Secretary of the Commonwealth William Galvin's Securities Division said it had settled with Blue Vase Holdings, which agreed to cease and desist selling unregistered securities, pay a fine and be censured, and offer rescission to investors.


What do you think?

View comments

Recommended for you

Featured video


The importance of a diverse team

Clients, advisers, and even communities are telling firms that yes, diversity within the advisory community is important.

Latest news & opinion

Joe Duran has a game plan, and anyone can play

The CEO of United Capital built a formula for holistic financial planning that any firm can tap into — for a price.

LPL video about private equity looks like a swipe at Cetera

Recruiting video warns about potential consequences for advisers when a PE firm buys a broker-dealer.

Envestnet Tamarac partners with Schwab, TD on digital account openings

Auto-filling documents designed to make onboarding more efficient for RIAs and more convenient for clients.

Wells Fargo plans to cut staff up to 10% within next three years

Bank is struggling to cut spending amid regulatory fines and higher legal costs stemming from scandals.

Universal life insurance lawsuits underscore product risk

Sudden cost increases could cause clients to pay much higher annual premiums — or lapse their policies.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print