Maryland is the latest state in the US to join “Operation Cryptosweep,” an ongoing probe initiated by the NASAA to combat fraudulent ICOs and cryptocurrency-related investment products.
Maryland Attorney General Brian E. Frosh touted the effectiveness of the initiative, noting that the probe has resulted in 35 enforcement actions against fraudulent crypto investment schemes and ICOs to date in 2019 alone.
According to an official press release published on Wednesday, the Maryland Securities Division has initiated an enforcement action against a Bitcoin trading platform that promised investors returns as high as 150%.
“Cryptocurrency investments are risky. Investors should be extra cautious when dealing with promoters who claim their offering does not have to be registered with securities regulators,” Frosh cautioned.
“Quick returns of 150% are as rare as Bigfoot. Make sure to do independent research the product before you invest.”
The increasing interest in cryptocurrencies has attracted more than a few unscrupulous individuals who hope to scam those investors looking to gain a hefty profit from participating in the crypto ecosystem.
To protect investors from falling prey to ICO and other cryptocurrency-related investment scams, the North American Securities Administrators Association (NASAA) launched “Operation Cryptosweep” last year.
“The persistently expanding exploitation of the crypto ecosystem by fraudsters is a significant threat to Main Street investors in the United States and Canada, and NASAA members are committed to combating this threat,” said Joseph P. Borg, former NASAA president, when the operation was first announced.
The scope of the operation is staggering, stretching across 40 different jurisdictions across the United States and Canada.
Some of the U.S. states working with the NASAA on “Operation Cryptosweep” include North Carolina, South Carolina, North Dakota, Texas, Missouri, Indiana, Colorado, Georgia, Massachusetts, New Jersey, Alabama, Vermont, Pennsylvania, Ohio, Maryland, and New York.
Provinces in Canada that are part of the ongoing operation against fraudulent ICOs include Quebec, British Columbia, and Nova Scotia.
Hitting the ground running
In August 2018 – just three months after its inception – the NASAA announced that the initiative had launched more than 200 active investigations as part of the criminal sweep.
While casting a critical eye towards ICOs, current NASAA President Michael S. Pieciak admits that not every project that is investigated by the initiative is guilty of being fraudulent.
“Operation Cryptosweep” has resulted in numerous cease and desist orders being levied against individuals and companies that are looking to bilk investors out of their money.
A number of projects have been shut down due to registration violations, the sale of unregistered securities, fraud, and deceptive or misleading statements.
Some of the projects targeted by the NASAA for enforcement action include BitConnect, Bionic Coin, Life Cross Coin, My Crypto Mine, Pension Rewards Platform, Power Mining Pool, and Union Bank Payment Coin.
The NASAA and its members recommend that investors exercise due diligence and caution before investing in an ICO or some other cryptocurrency-related investment.
The agency has produced a number of videos designed to offer some guidance on the subject to potential investors.
Some advice offered by the NASAA about investing in ICOs includes:
- Don’t Invest Money You Can’t Afford to Lose. ICOs are not the same as other asset classes like traditional stocks and bonds. Investing in ICOs should be seen as entirely speculative.
- Read the fine print. Don’t assume all ICOs are the same or have the same terms.
Research the ICO on the web. Particularly on popular sites such as reddit.com, bitcointalk.org. Research the individuals behind the ICO. Ask questions and be skeptical.
- Don’t be star struck. Sometimes ICOs are promoted by celebrities or “industry insiders” who encourage the public to get in on the deal fast.
- Think with your head, not your heart. Scammers often use language intentionally designed to provoke some emotional reaction in their targets. Whatever the appeal, remember that investing is a business decision.
NASAA not acting alone
The NASAA is not the only governmental group going after fraudulent ICOs.
The U.S. Securities and Exchange Commission (SEC) has been increasingly active in going after companies launching ICOs without proper registration for selling securities.
The SEC recently filed a lawsuit to freeze the assets, estimated at US$8 million, raised by the VERI Token ICO back in 2017.
The SEC has also taken action against Kik Interactive, NextBlock Global Ltd., Natural Diamonds Investment Co., Mutual Coin Fund LLC, and Gladius Network LLC this year alone.