The North American Securities Administrators Association (NASAA) today announced its 2018 annual enforcement and compliance results, highlighted by a series of high-impact cases involving charges with manipulation, crypto fraud, and unlawful use of customer funds.
During NASAA’s 2018 fiscal year, the agency’s enforcement actions secured more than $1 billion in restitution, disgorgement, and penalties. Out of this figure, more than $558 million returned to investors million while $490 million in fines were handed over to the regulators.
The NASAA revealed that more than 130 new cryptocurrency-related cases are being actively investigated, with 35 enforcement actions already taken since the beginning of 2019.
“This number has risen for three consecutive years, more than doubling from 335 in 2015. Given the ongoing state enforcement efforts against fraudulent activity involving cryptocurrencies, it would not be surprising to see a sustained high level of investigations and actions against unregistered individuals and firms in the coming years,” the report states.
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These investigations are part of the association’s ongoing coordinated regulatory initiative called Operation Cryptosweep, which was launched in 2018. At that time, more than 40 state and provincial securities regulators in the United States and Canada launched their coordinated enforcement sweep of the ICO market.
Crypto firms are moving to locations more welcoming
The NASAA noted that while some of the investigations involve suspected securities fraud, the regulators are also finding many other violations, including failure to register a product before it was offered to investors.
NASAA also organized a task force to launch investigations into ICOs and cryptocurrency-related investment products. The task force found more than 30,000 crypto-related domain name registrations, the vast majority of which appeared in 2017 and 2018.
Confronted with North American watchdogs intensifying scrutiny of crypto fund-raising, many startups are moving their businesses to locations more welcoming such as Malta, Switzerland, and Eastern Europe.
“States reported acting against 639 registered individuals and firms in the securities industry (broker-dealers and investment advisers), and 639 unregistered individuals and firms. Within the licensed securities industry, NASAA’s U.S. members reported a five-year high in the proportion of enforcement actions involving investment adviser investment adviser firms,” said Christopher Gerold, NASAA President and Chief of the New Jersey Bureau of Securities