Nova Scotia Issues Investor Alert Against “aGifttoken” ICO Sale

The Securities Commission in the Canadian province of Nova Scotia has issued an alert warning local investors to be wary of a crypto project/ICO sale called aGiftoken, which is not licensed to sell securities in the region.

aGifttoken is now selling a 10-20 million AGT tokens for the equivalent of one dollar each (in ethers) in an ICO (initial coin offering) sale that started July 5th.

The tokens are purportedly Ethereum compatible ERC-20 tokens being sold for ethers, the “currency” native to the Ethereum blockchain (one ETH currently trades for $228 USD).

The Securities Commission of Nova Scotia is warning the public that this project appears to emanate from Bucharest, Romania.

One of the risks in crypto markets is that tokens can be easily circulated across jurisdictions, but enforcing investor rights across borders is considerably harder:

“The Commission urges Nova Scotians to exercise extreme caution when dealing with firms that are not registered in Nova Scotia. It is illegal to solicit investments in Nova Scotia without registering with the Commission and complying with Nova Scotia securities laws. To see if a company or person is registered, you can check the Canadian Securities Administrators’ National Registration Search.”

Stephanie Atkinson, Acting Director of Enforcement with the Commission, says that a registration search should standard practice. “Always take the time to check registration and understand the risks and costs involved with your investments.”

aGifttoken’s landing page includes the same vague technobabble and sentimental rhetoric common to 2016/2017 “ICO mania” marketing materials.

For example:

“Offering people gifts is one of the most wonderful traditions, as it shows generosity and caring.”

“aGifttoken is an exceptional system that is created to rebrand gifting. It offers a method of cultivating trust between a gift sender and a gift receiver with the aid of Blockchain technology.”

“Our vision is to create a world in which you and your friends can celebrate the most important events regardless the geographical barriers. By using our platform we enhance the art of ensuring trust and confidence that makes gift senders to contribute more than initial estimated to the community they belong.”

As a member of the North American Securities Administrators Association (NASAA), the Nova Scotia Securities Commission is contributing to Operation Cryptosweep, a transcontinental, multi-agency effort to combat ICO fraud.

That operation has resulted in, “130 new investigations of Initial Coin Offerings (ICOs) and cryptocurrency-related investment products…(and) 35 enforcement actions.”

Texas Issues Cease and Desist Orders Against Unregistered Crypto and Forex Investment Entity

The Texas State Securities Board (TSSB) has issued cease and desist orders against “Forex and Bitcoin Trader,” an unregistered dealer of cryptocurrencies, derivatives and foreign currency promising 900% returns in 14 days in online advertisements targeting Dallas investors.

This is the fourth emergency action undertaken by the board since it launched its “second regulatory sweep” in June in response to a sudden uptick in the price of Bitcoins.

“In 2019, the price of one Bitcoin, the most valuable cryptocurrency by market value, quadrupled to above $13,000 in late June,” the TSSB writes. “One week later the price sank below $10,000, then jumped to $12,000 one week after that.”

The “first regulatory sweep” was initiated in December 2017, also “in response to a sharp increase in the price of bitcoin and other cryptocurrencies.”

That sweep, “resulted in 10 emergency injunctive actions against promoters illegally or fraudulently offering securities tied to cryptocurrencies in Texas.”

To date, the TSSB has initiated emergency actions against 62 parties in 24 administrative cases involving cryptocurrencies.

In the latest case, “Forex and Bitcoin Trader,” which advertises offices in New York, is accused of, “…soliciting Texas investors with the promise that a principal investment of $2,000 will return $20,000 after 14 days, minus commissions and fees equal to 10% of returns.”

The company has claimed to be licensed to provide trading services and advice but is not, the TSSB claims, and is using “deceptive and misleading statements” to solicit investor funds.

The company is also allegedly, “…misleading investors by stating it has an insurance policy that backs client funds and a balance sheet with sufficient net capital to guarantee returns.”

Forex and Bitcoin Trader is also, “…failing to inform investors of the risks in trading cryptocurrency and foreign currency,” and including material facts about how fluctuations in currency values can affect returns and how margin calls, “may lead to substantial losses.”

Texas has been very active in it’s pursuit of fraudulent crypto schemes.

The state was a key player in “Operation Cryptosweep,” a coordinated investigative and enforcement action involving over 40 state and provincial regulators and law enforcement agencies across the US and Canada that began in May 2018.

That operation resulted in over 200 active investigations into ICOs (initial coin offerings), the North American Securities Administrators Association (NASAA) claimed.

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NASAA Reports Increase in Cryptocurrency Fraud Identified by State & Provincial Regulators

130 Crypto Investigations Have Been Launched in the US and Canada

The North American Securities Administrators Association (NASAA), the lobbying association representing state and provincial securities regulators, says there has been an increase in crypto-related fraud as “investors and con artists alike have returned to cryptocurrency-related investment products looking for quick profits.”

Recently, the price of Bitcoin has surged jumping to around $12,000. Many observers claim the increase in price is due to global market uncertainty tied to the trade war. The rise in value has increased the interest in crypto from both consumers and fraudsters, reports NASAA.

NASAA states that the Operation Cryptosweep initiative, pursued by the states and provinces, has opened up 130 new crypto fraud investigation with 35 pending or completed enforcement actions since January 1st.

In April 2018, NASAA organized a task force of its member regulators to begin a coordinated series of investigations into initial coin offerings (ICOs) and other cryptocurrency-related products. NASAA reports that this coordinated approach has resulted in 85 pending or completed enforcement actions involving ICOs or cryptocurrency-related investment products. Regulators have pursued approximately 330 inquiries or investigations in both the US and Canada.

Michael S. Pieciak, NASAA President and Vermont Commissioner of Financial Regulation, says that recent headlines of new crypto products and a “near tripling in value” of some crypto have attracted more white-collar criminals and other bad actors. Pieciak said not all crypto-related investment is fraudulent but it is important for issuers to adhere to state and provincial laws. Investors must understand the risks associated with any crypto investment.

 “Investors should be mindful of the hype and be aware of the risks when considering whether to jump into cryptocurrency-related investment products,” said Pieciak commenting on the acts of fraud.

Pieciak advised consumers to investigate before they invest. And be cautious when promoters claim an offering does not need to be registered as a security.

“… contact your state or provincial securities regulator with any concerns before parting with your hard-earned money,” he recommended.

NASAA has also announced a new video series featuring common crypto scams to help consumers be more aware of the types of fraud being perpetrated.

Additionally, NASAA warns investors to be aware of:

  •  Volatility: Cryptocurrency markets are highly volatile, making them unsuitable for most investors looking to meet long-term savings or retirement goals.
  • No recourse: Cryptocurrency and many crypto-related investments are subject to little regulatory oversight, and there may be no recourse should the cryptocurrency disappear due to fraud or a cybersecurity breach.
  • Untraceable: Cryptocurrency or crypto-related investments only exist on the internet. Issuers can be located anywhere in the world, so it may be impossible to trace and recover lost funds through the courts.

Texas Securities Board Launches Second “Investigative Sweep” in Response to Recent Tripling of Bitcoin Price

Three parties accused of soliciting Texas investors with fraudulent cryptocurrency offerings have received emergency cease and desist orders as part of Texas’ “second regulatory sweep of cryptocurrency investment offerings.”

Like the first sweep, which began in December 2017, the second sweep has been launched, “in response to a sharp increase in the price of bitcoin and other cryptocurrencies,” in recent months, a press release from the Texas State Securities Board states.

According to the release:

“The three individuals and one company named in the June 28 orders are recruiting potential investors through advertisements on public Facebook groups for Texans working from home or interested in doing so.”

Among the recently sanctioned promoters are, “Mikhail Rania Safiya… and Madeline O’Farrell, both allegedly, “promising investors they can earn lucrative profits for them by trading Bitcoin and other cryptocurrencies and foreign currencies.”

Neither party is registered to sell securities in Texas, and, “both are intentionally failing to disclose the risks of trading cryptocurrencies, foreign currencies, and other products.”

“Maxi Samantha Fortune” of Tint X Mining, based in India,”is telling investors they can earn $213,300 over three months on an initial investment of $5,100 in the company’s Bitcoin mining operation.”

Tint X is also falsely claiming to be licensed, the Board says.

According to the release, Texas’s first independent regulatory sweep, “resulted in 10 emergency injunctive actions against promoters illegally or fraudulently offering securities tied to cryptocurrencies in Texas.”

As well:

“To date, the State Securities Board has taken emergency action against 61 parties in 22 administrative cases involving investments tied to cryptocurrencies.”

Texas’s was also an emphatic contributor to the 2018 multi-agency, North American anti-crypto-fraud push called “Operation Cryptosweep.”

Over 40 state and provincial regulators and law enforcement agencies across the US and Canada cooperated in Operation Cryptosweep, which began in May 2018, and more than 200 investigations were undertaken close to when the operation launched .

Joseph Rotunda, Director of the Enforcement Division of the Texas Securities Board, said at the time that Operation Cryptosweep was confirming his suspicions.

“The market for cryptocurrency investments is saturated with widespread fraud,” he said.

North Dakota Securities Commissioner Issues Cease & Desist to Multiple Initial Coin Offerings

Last week, the North Dakota Securities Commissioner Karen Tyler issued three separate Cease & Desist (C&D) orders against three initial coin offerings (ICOs).

The new C&Ds are part of an ongoing initiative by the Commissioner and the Department’s ICO Task Force which is investigating questionable ICOs. This is also part of the nationwide “Operation Cryptosweep” that incorporates all 50 state regulators and provinces of Canada. In September, North Dakota did the same issuing three separate C&Ds against cryptocurrency based firms.

The most recent ICO investigations include the following companies: Crystal Token, Advertiza Holdings (Pty) Ltd., and Life Cross Coin a/k/a LifecrosscoinGmbH.

Most ICO enforcement actions target the offering of unregistered securities – a flagrant violation of US securities law.

Tyler commented on the enforcement actions saying the continued exploitation of the cryptocurrency ecosystem by criminals is a a threat to Main Street investors.

“In formulaic fashion, financial criminals are cashing in on the hype and excitement around blockchain, crypto assets, and ICOs – investors should be exceedingly cautious when considering a related investment,” said Tyler.

According to the Securities Commission, Crystal Token is an ERC 20 token and is identified as CYL.  The Crystal Token’s website touted an “evolutionary multi-utility token” to trade in other cryptocurrency and earn daily interest up to 2% per day. Interest paid on the staking of CYL is paid in another token known as “VCYL” that is also offered by Crystal Token.

The website was reviewed and found available to residents of North Carolina. Additionally, the site included” allegedly fraudulent statements with claims of excessive unsubstantiated rates of return on investment.”

The next crypto offering is Advertiza Holdings. This ICO offers virtual currency called “Tizacoin” or “TIZA” which is said to allow investment into the company focusing on digital advertising. The Commission said the coin was represented as a utility token but was in fact an unregistered security. Advertiza falsely claimed it has made a filing with the SEC under federal Rule 506c of Regulation D. This ICO was also available to residents of North Dakota.

Life Cross Coin, or Lifecrosscoin, operates a website from a Berlin IP address that is “associated with ransomware, trojans, and identity fraud.”

The website purports its virtual currency, “Life Cross Coin” or “LICO” will be used for the donation and support of charitable organizations.

The website claimed that an investor can purchase coins in the ICO and receive a “huge return on investment” through holding the coins and selling at a later date. Once again, an unregistered security.

The three crypto companies targeted in September included: BitConnect and related companies BitConnect LTD and BitConnect International PLC, Magma Foundation and related companies Magma Coin and Magma, and Pension Rewards Platform, aka Pension Rewards.

BitConnect is perhaps one of the most famous crypto scams due to a viral video used to the promote the exchange and affiliated cryptocurrency.

Many US states have been involved in the investigation of ICOs and blockchain based companies. Earlier this week, Colorado filed multiple C&Ds pertaining to ICOs.

NASAA: “Operation Cryptosweep” Announces 200 ICO Investigations Underway Now

200 active investigations into ICO (initial coin offering) fraud are presently being conducted across North America as part of “Operation Cryptosweep,” the North American Securities Administrators Association (NASAA) announced yesterday.

Operation Cryptosweep, an investigative and enforcement action being coordinated by over 40 state and provincial regulators and law enforcement agencies across the US and Canada, began in May.

The NASAA says a total of 46 enforcement actions involving ICOs or cryptocurrency-related investment products have been initiated so far as part of the operation.

Over the past few years, initial coin offerings created much excitement as a way to generate fast capital and engage in speculative investing without having to fulfill the elaborate legal oligations of creating an IPO .

Possibly in order to skirt securities regulations, many ICO purveyors sold their investment products as “utility tokens” rather than securities, and claimed these tokens would one day give users access to important blockchain services.

Although most issuers insisted in public that the tokens were not securities, ICO “utility tokens” are typically moved onto dedicated exchanges for speculative trading as soon as possible.

Critics have questioned the idea of a “utility token” by arguing that it’s absurd to ask customers to use an appreciable asset to purchase goods and services. “That’s like buying products on Amazon using Amazon stock,” said ICO critic and former Wall Street risk analyst Tone Vays.

Various researchers and pundits have claimed that between 67 and 81% of all ICOs have already failed. “Exit scams” are common, and scams reported on a daily basis in the global press.

In the early days of the investigation, the NASAA claimed it found over 30,000 online domains promoting cryptocurrency products, the vast majority of them new.

As of today, the website shows that 114 000 Ethereum ERC 20 tokens (the most popular ICO format) have been created.

Ethereum was the first blockchain to popularize and enable the creation of ICO tokens. Several other platforms have since emerged that also offer the creation of ICOs.

Borg said that Operation Cryptosweep regulators have not only found instances of outright securities fraud, but, “are finding many other potential violations of state and provincial securities laws, including failure to properly register a product before it was offered to investors.”

He emphasized the importance of compliance and responsibility among businesses interested in the new method of fundraise:

“While not every ICO or cryptocurrency-related investment is a fraud, it is important for individuals and firms selling these products to be mindful that they are not doing so in a vacuum; state and provincial laws or regulations may apply, especially securities laws. Sponsors of these products should seek the advice of knowledgeable legal counsel to ensure they do not run afoul of the law. Furthermore, a strong culture of compliance should be in place before, not after, these products are marketed to investors.”

Borg also advised investors to be similarly circumspect:

“Be cautious when dealing with promoters who claim their ICO offering is exempt from securities registration but do not ask about your income, net worth or level of investing sophistication. Do your homework and contact your state or provincial securities regulator with any concerns before parting with your hard-earned money – afterwards may be too late.”

When Operation Cryptosweep was announced in May, Tennessee Department of Commerce and Insurance Commissioner, Julie Mix McPeak, called cryptocurrency fraud, “a significant threat to Main Street investors in Tennessee.”

Forty North American Regulators Cooperating in ‘Operation Cryptosweep’ Crackdown

Joseph Rotunda, Director of the Enforcement Division of the Texas Securities Board and the Vice-Chair of the Enforcement Section for NASAA, said that, even in it’s early stages, Operation Cryptosweep was confirming his suspicions:

“The market for cryptocurrency investments is saturated with widespread fraud.”

See all Cryptosweep Actions below.

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Hosho Founder: Regulators Must Crack Down on Cryptocurrency Fraud

Last week, the North American Securities Administrators Association (NASAA) announced Operation Cryptosweep – an attempt to shut the door on scam initial coin offerings (ICOs) that have polluted the digital assets marketplace. The profound abuse and fraud has marred this new sector of finance harming legitimate operators and issuers. Regulators have struggled to get up to speed on token offerings as the crypto market went from zero to billions in a very short time.

Cryptosweep saw coordinated action from 40+ North American regulators (Canada and the US) with more than 70 enforcement actions already taking place. While the regulatory approach highlights the risk of investing in digital assets, most industry participants welcomed the crackdown as necessary to flush out the bogus operations.

Yo Kwon, CEO and co-founder at Hosho – a blockchain security operation that works with issuers on smart contract creation, had this to say about Operation Cryptosweep;

“It is in the best interest of the crypto industry as a whole for regulators to crack down on fraud and for investors to become better acquainted with risk factors associated with potential investments. It is no secret in the space that there is a plethora of scams and nefarious actors,” said Kwon.

As the ICO industry has grown the degree of sophistication of the fraud has increased as well. Plastering the photos of “ICO Advisors” on the home page of an offering has become a questionable practice in an attempt to paint of offering as valid;

“In many instances, it can be difficult to discern a scam from a legitimate ICO because so many of the steps they take are similar,” Hosho explained. “A bad actor will grasp onto whatever legitimacy they can, whether that is from advisors or partnerships, and leverage that to increase their reputation, which is awfully similar to what a legitimate entity may also do. With the NASAA organizing a task force to investigate and take enforcement action against potentially fraudulent projects, hopefully more companies will put a greater level of effort toward doing things the right way, separating themselves from the bad actors, and fewer investors will be scammed.”

Hosho says that projects that signal a long term vision are good signs. Fraudsters don’t care about the health of their token and will not be pushing for strong security measures. Part of a scam may even rely on poor security practices to obfuscate who may be at fault when the wheels fall off.

“When investigating projects, one factor the NASAA could hone in on is what kind of security measures are put in place. The responses and attitude from those leading the project can be very telling of the motivations behind the project,” Hosho stated. “A legitimate company will want processes to be as secure as possible to protect their reputation and capital and would be aligned with making opportunities for bad actors more difficult. It’s very easy to investigate whether an ICO has had their smart contracts audited by a credible vendor and a penetration test done of their web applications.”

Between the ongoing actions by both state and federal regulators the good operators should inevitably rise to the top. Hopefully, once the dust has settled, the ICO industry can regain its footing in the US and become a favored location for digital asset Fintech innovation.

CFTC Chair Giancarlo Applauds Operation Cryptosweep. Says “Virtual Currencies and Other Exponential Digital Technologies are Taking Us into a New Era”

On the same day the North American Securities Administrators Assocation (NASAA) announced “Operation Cryptosweep” – a coordinated enforcement action targeting fraudulent initial coin offerings (ICOs), Commodity Futures Trading Commission (CFTC) Chair J. Christopher Giancarlo delivered a speech to NASAA members. Within his prepared remarks, Giancarlo stated;

“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.”

NASAA members from over 40 jurisdictions have participated in Operation Cryptosweep. To date,  approximately 70 inquiries and investigations and 35 pending or completed enforcement actions have been taken since the beginning of May. Additional enforcement actions  may be forthcoming – not to mention the many that took place prior to this month. In their defense, NASAA says that not every ICO is fraudulent but the group urges the public to remain vigilant regarding possible acts of fraud.

Giancarlo has become a favored regulator within the cryptospace. Following his testimony before the Senate Banking Committee this past February, cryptocurrency advocates rushed to compliment his balanced approach and respect for entrepreneurial innovation in the financial services industry. Unlike some other policy makers, Giancarlo has been hesitant to over-regulate and crush innovation in its infancy. This is not to say that the CFTC is not vigilant in its mission of rooting out fraud and monitoring the ICO marketplace. Quite the contrary. Vigilance against potential acts of fraud is vital to fostering a robust ICO ecosystem. The CFTC has consistently dealt with bogus ICOs but that is different from enabling change – even when change veers from established financial and regulatory norms.

The “Inexplicable Power of the Word”

In Chair Giancarlo’s speech, the regulator stated;

“As you may know, US futures exchanges and clearinghouses are self-regulatory organizations for the markets they operate.  As front-line regulators, they should be proactive, flexible and engage in heightened review of new virtual currency contracts and their oversight to ensure proper surveillance of the trading and clearing of these contracts given the risks. I believe that this advisory should help exchanges and clearinghouses effectively and efficiently discharge their statutory responsibilities as SROs, while keeping pace with the unique challenges of emerging virtual currency derivatives.”

But Chair Giancarlo added;

“One thing is certain: ignoring these changes in the market would be a profound mistake. They will not go away. We must be proactive in making a regulatory and statutory framework that is ahead of the curve, prevents and punishes fraud and criminality, gives clarity and coherence to these emerging technologies, and anticipates the evolution of new instruments such as virtual currencies. The same technology can give us advantages in market regulation. Our task, as market regulators, is to set and enforce rules that foster innovation while promoting market integrity and confidence.” (emphasis added)

[clickToTweet tweet=”‘One thing is certain: ignoring these changes in the market would be a profound mistake. They will not go away.’ #Blockchain #Cryptocurrency” quote=”‘One thing is certain: ignoring these changes in the market would be a profound mistake. They will not go away.’ #Blockchain #Cryptocurrency”]

Giancarlo said we are at a juncture of changing times thus indicating his belief that Bitcoin, ICOs, and other digital assets are here to stay. Unlike some other pundits or commentators, such as Nouriel Roubini (AKA Dr. Doom)  that believe cryptocurrencies are for “suckers” and “bullshit” or the legendary Warren Buffet who recently called Bitcoin “rat poison” – Giancarlo is ready to defend change and speak his mind.

“The world is indeed changing, moving into a virtual universe.  Language and ideas are being transformed,” stated Giancarlo. “Distributed ledgers, virtual currencies and other exponential digital technologies are taking us into a new era.”

While the news of the day may have been about the buzzy phrase Operation Cryptosweep, Giancarlo is looking to what happens after the scammers are flushed out, and an established digital assets marketplace gains its footing.

Joshua Klayman, Chair of the Wall Street Blockchain Alliance Legal Working Group and co-Chair of Morrisson Foerster global blockchain group, said that Chairman Giancarlo’s speech was important and timely.

“While he spoke about developing a framework of cooperation among regulators at the U.S. federal and state levels to better identify patterns of wrongdoing as well as aggressive prosecution of fraudsters and manipulators, his message arguably conveyed much more than just that,” said Klayman. “In his speech, Chairman Giancarlo described the CFTC as having “been at the regulatory horizon on virtual assets, especially with our criteria for heightened review of new virtual currency products” and mentioned a forthcoming CFTC staff advisory that would provide “guidance to exchanges and clearinghouses on certain enhancements when listing a derivative contract based on virtual currency.”

Klayman pointed to the fact that Giancarlo told listeners that many in the world look to the United States for leadership and guidance and that the American public expects a coordinated approach to regulatory oversight.  He spoke about the value of “best practices” that are “ahead of the curve, sensible and effective.”

“As I have said often, I believe that we are at a societal inflection point. In my personal view, Chairman Giancarlo’s acknowledgment that the world is changing and moving into a virtual universe, a new era ushered in by “blockchain, virtual currencies and other digital technologies,” seemed to strike a thoughtful tone that many in the blockchain and crypto space may welcome,” Klayman stated.

Yes, the world is watching as the U.S. is the leading market economy in the world. And it is “looking to the United States for leadership and guidance.” The U.S. cannot turn its back on innovation due to the intrinsic risk of the new to the detriment of an alternative finance future that may be beneficial.

That Chair Giancarlo understands this is clear, similar to SEC Commissioner Peirce’s call for thoughtful regulation of digital assets. Peirce recently stated regulators should “not let our lack of familiarity with the technology breed anxiety and therefore bad regulation.”  But, unfortunately, it is not certain his peers are as willing to embrace the crypto marketplace, competition, and the possible benefits of decentralization and digital assets that challenge the long established regulatory convention.

[clickToTweet tweet=”the world is watching. And it is looking to the United States for leadership and guidance #Cryptocurrency #Blockchain” quote=”the world is watching. And it is looking to the United States for leadership and guidance #Cryptocurrency #Blockchain”]

SEC Chair Jay Clayton Applauds State’s Operation CryptoSweep Action Against Bogus ICOs

Securities and Exchange Commission (SECO Chairman Jay Clayton has issued a comment on Operation Cryptosweep – a coordinated enforcement action launched by state and provincial regulators attacking fraudulent initial coin offerings. Clayton said the North American Securities Administrators Association members (NASAA) play an important role in “protecting Main Street investors.”

Clayton remained consistent that existing securities laws still apply whether the offer is called an ICO or an IPO.

” At their core, these laws require full and fair disclosures of material information about both the securities and the venture being funded.  Unfortunately, some market participants seem to believe that the use of new technology provides a basis for ignoring the core principles of our securities laws.  In the United States, we have built a $19 trillion dollar economy by facilitating investments in our public and private capital markets through our disclosure-based approach to regulation.  Certainly there are improvements that can be made to our regulatory system.  There always are and we are pursuing various initiatives to increase efficiency and enhance investor protection.  But there is absolutely no case for abandoning our core principles.   I know NASAA shares this view. “

Clayton added that the actions being announced should be a “strong warning to would be fraudsters.” He stated that many sets of eyes are watching at an international level. Clayton referenced the ICO spoof site that was created by SEC staff stating;

“The offering is not real.  It is a fake.  But it does illustrate the common “red flags” of fraud in the ICO markets and how little work it takes to engage in such a fraud.  I encourage investors to visit and view the materials here to help you tell a real investment opportunity from a scam.  Also, I previously suggested a list of sample questions for investors considering a cryptocurrency or ICO investment opportunity here.  Investors should demand answers to these and other questions about potential investments. Investors should also remember that although the SEC and other federal, state, and provincial regulators are committed to protecting investors in these markets, there is a real risk that enforcement efforts may not make investors whole who have lost their investments to fraud.”


Forty North American Regulators Cooperating in ‘Operation Cryptosweep’ Crackdown

Multiple state securities regulators in the US revealed yesterday that they are taking part, along with 40 other North American state and provincial regulators, in a coordinated crackdown on fraudulent cryptocurrency projects.

“The actions announced today are just the tip of the iceberg,” stated Joseph P. Borg, NASAA President and Director of the Alabama Securities Commission.

“Operation Cryptosweep” began May 1st and has reportedly resulted in 70 enforcement actions so far. The sweep is being coordinated by the North American Securities Administrators Association (NASAA), the group that represents state and provincial securities regulators.

“The actions announced today are just the tip of the iceberg,” said Tennessee Department of Commerce & Insurance (TDCI) Assistant Commissioner Frank Borger-Gilligan in a TDCI release.

Julie Mix McPeak, TDCI Commissioner added, “Fraudulent activity involving ICOs and cryptocurrency-related investment products is a significant threat to Main Street investors in Tennessee.”

A NASAA task force reportedly found over 30,000 online domains related to cryptocurrency products, the vast majority of them new.

[clickToTweet tweet=”A NASAA task force reportedly found over 30,000 online domains related to #cryptocurrency products, the vast majority of them new” quote=”A NASAA task force reportedly found over 30,000 online domains related to #cryptocurrency products, the vast majority of them new”]

Other sources have estimated a total of 1800 ICOs (Initial Coin Offerings) circulating.

A release from the Texas State Securities Board, states that that agency, “spearhead(ed)… (and) took the lead in organizing, managing, and coordinating the NASAA sweep”:

Texas Securities Commissioner Travis J. Iles has entered three enforcement orders since the start of the sweep, bringing to 10 the number of actions the State Securities Board has taken against illegal or fraudulent cryptocurrency promoters since Dec. 20, 2017. Texas was the first state regulator to issue an order against a promoter offering cryptocurrency-related investments.

The release adds that Texas embarked on a four-week investigation into cryptocurrencies last December and is presently conducting 60 investigations of its own into, “suspect offerings targeting Texas residents.

Joseph Rotunda, Director of the Enforcement Division of the Texas Securities Board and the Vice-Chair of the Enforcement Section for NASAA, stated in the Texas release, “Although the task force’s work is far from complete, my suspicions have already been confirmed. The market for cryptocurrency investments is saturated with widespread fraud.”

Fraudulent ICO websites are know to have obscured owner identities, used fake location data,  downplayed risks and and made promises of implausible returns. A number of laughable examples of slick ICO websites have used celebrity likenesses to represent company principles.

The TDCI stated, “a critical component of ‘Operation Cryptosweep’ is raising public awareness,” and the agency plans to issue consumer alerts all this week to, “urge caution when investing in cryptocurrencies.”

“Not every ICO or cryptocurrency-related investment is fraudulent,” said Borger-Gilligan, “but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution.”

NASAA has posted multiple warnings about initial coin offerings and cryptocurrency in general. Sections of their website include “be cautious of the crypto investment craze” and “get in the know of ICOs“.


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