The United States has had a rocky relationship with cryptocurrencies. Regulatory concerns continue to mark a complex legal debate regarding cryptocurrencies. In particular, Initial Coin Offerings are a market rife with scams. The nature of an Initial Coin Offering does not lend itself to regulation or to transparency, and the result has often been the defrauding of shareholders following the conclusion of the crowdfunding campaign.
The North American Securities Administrators Association, a regulatory agency concerned with the trade of securities in the United States, Mexico, and Canada, recently announced their newest investigatory operation, known as Operation Crypto-Sweep. This operation will target hundreds of companies all over the continent who operate primarily on the blockchain.
The main concern of these investigations is the concept of a MLM cryptocurrency scam. Multi-level marketing scams are prevalent on the blockchain, where shareholders are given little say in the movements of the company and few checks on anonymous leader actions are available. These scams have defrauded investors out of millions, making cryptocurrency regulation a primary concern of United States government.
One important to note is that, despite its official-sounding title,the NASAA Task Force is a loosely-associated and entirely voluntary organization of securities administrators all over North America. Despite this loose association and the lack of substantive power, the organization has consistently been able to recommend investigations which have led to the downfall of several scams in the past.
One potential target of the ongoing investigations by the organization includes the BitConnect Ponzi scheme. The leader of this massive conflict went into hiding all over the world following its revelation as a multi-level marketing scam. BitConnect leaders who haven’t gone into hiding have created Youtube videos boasting about their wealth, some even stating that they are “set for life.”
It is unclear thus far which companies are under ongoing investigation by the organization. However, information regarding the amount and nature of the investigations resulting from this new operation are available. The association is investigating companies in over 40 jurisdictions.
The investigations seem to have had moderate success, as well. Seventy inquiries and 35 pending investigations are currently on the docket for the regulatory association. Moving forward, speculators should come to expect more information on the investigatory efforts by NASAA's Task Force and Operation Crypto Sweep movement.
NASAA Take Force Challenges & Moving Forward
One significant obstacle to the success of organizations such as NASAA is the unavailability of information regarding victims. In a Washington Post interview with NASAA President Joseph Borg, he remarked that victims are often unknown unless they “call you up.”
Consequently, NASAA investigative methods will need to focus on gaining the trust of victims of scams in order to gain access to their testimony for both files and trials.
The future of the cryptocurrency community is dependent on the efforts of regulatory agencies in preventing the scams that minimize consumer trust in the market. The recent operation brought forth by NASAA seems to be a step in the right direction.