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North American Regulators Investigate Suspects of Fraud With Cryptocurrencies in the United States and Canada

The North American Securities Administrators Association (NASAA) recently announced the opening of 70 investigations of platforms dedicated to the investments in cryptocurrencies and initial coin offerings (ICOs). The platforms will be investigated because of the suspicions related to their operation.

As part of its first annual report, the NASAA informed the public about an action plan known as Operation Cryptosweep. This plan presents one of the biggest offensives coordinated by the United States of America and Canada, whose goal is to eradicate the scam and fraud from the cybernetic financial markets, with special focus on the cryptographic currencies. Lydia Beyoud from Bloomberg, published the following tweet on her official Twitter account: “”Operation Cryptosweep:” State securities regulators in more than 40 N American jurisdictions have launched 70 investigations into ICO an crypto investment offerings since May.”

This way, the NASAA activated 70 legal investigations in 40 different jurisdictions in both the United States and Canada, out of which a dozen are related to platforms dedicated exclusively to selling cryptocurrencies and investing in them.

Likewise, the authorities assured that 35 cases have already been solved or are about to be solved, among which they point out some initiatives that violated the financial laws in both countries, which is why these entities received cease and desist warnings from the authorities.

Joseph Borg, the President of the NASAA and the Securities Commissioner of Alabama, said the goal of this offensive was to protect the investments of the citizens in the face of the new financial offers that appeared on the market. This way, Borg pointed out that not all the investment products were fraudulent, which is in line with the opinion of Jay Clayton, the Chairman of the United States Securities and Exchange Commission (SEC). However, due to the rising popularity and growth of the cryptocurrencies, Borg pointed out the higher risk of scams and frauds on the cryptocurrency market. Borg said: “We’re putting ourselves in the shoes of investors. We’re seeing what’s being promoted to investors. And then we’re taking the next step and then we’re finding out whether they’re complying with securities laws.”

Among the characteristics of the business based on cryptocurrencies that alarmed the regulatory authorities are the unrealistic promises about the earnings. Moreover, some businesses simply do not make clear the risks associated with the investment to the clients, which is a highly diffused practice on the market.

The NASAA pointed out that there are around 30,000 domain names related to the cryptocurrencies on the Internet, out of which the majority were registered during last year and this year.

Moreover, platforms that publish misleading advertisements are also being investigated, especially related to the practice of hiring a public figure for the promotion of a product or even using photos and/or videos of public figures without their authorization. This is something similar to what happened in the case of Miroskii, a company that used photos of celebrities to present its team. For example, the photo of the supposed graphic designer was actually the photo of a famous Hollywood actor Ryan Gosling. Even though the company announced the photos were manipulated by hackers, it was a sign of a potential fraud.


One of the cases that was investigated and solved by the NASAA is the one related to BTCrush, a platform for the sale of digital assets that operated in the United States of America without the necessary licenses. The company was also charged of presenting photos of an alleged mining farm located in a World War II bunker. In reality, the photos were taken from a public archive on the Internet and were not a reliable proof of the mining activity supposedly conducted by the company.

Moreover, the BTCrush was recruiting citizens of the state of Texas as sale agents and was promising them additional earnings if they promoted the platform. Due to all these fraudulent activities, the authorities notified the executives by sending them a cease and desist warning. The company responded by saying its management was not aware that United States citizens were using its platform. Nevertheless, the company promised to comply with the petition of the NASAA: “We sincerely regret that such precedents could have taken place. And we would like to inform you that if such precedents could have taken place, then we were not aware of such facts until today.”

After the case of BTCrush, the financial regulators hope that other websites that operate similar fraudulent activities would cease their operations voluntarily or decide to modify their illegal practices. After the cease and desist warning is sent, the accused entities have one months to respond or present an audition in front of the court.

Joseph Borg concluded by saying the regulatory entities were hoping the users of cryptocurrencies would participate more actively in the reporting of suspicious schemes, which is a practice that could purify the market and make the scammers go away, as well as protect the investments of the majority of the participants on the cryptocurrency market.

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