Cryptocurrency Investigations

The regulators are noticing a significant increase in cryptocurrency scams, as a result, the North American Securities Administration Association (NASAA) has decided to launch investigations over controversial crypto investment offerings.

In August, NASSA revealed that more than 130 digital currency cases are being actively probed, and around 35 enforcement actions have already been imposed since January 2019. The news about the new crypto investigation was published on Wednesday.

The new investigation is considered as a part of a regulatory initiative dubbed ‘Operation Cryptosweep. The initiative was founded in 2018 and has launched more than 200 crypto investigations.

Further, NASAA mentions that there has been growth in crypto scams as ‘investors and con artist alike have returned to cryptocurrency-related investment products looking for quick profits.’

NASSA report mentions, in recent-times, bitcoin value has increased to $12,000. Most experts believe the increase in the bitcoin value is due to market instability across the world linked to trade war. The rise in bitcoin price has enhanced the interest of users and scammers in the crypto industry.

Ever since the launch of the initiative, the co-ordinated NASSA crypto sweep has accounted in 85 delayed enforcement actions or closed action, including ICO (initial Coin Offering) or crypto-based investment products. The securities watchdog from Canada and US states have carried 330 investigations.

NASSA outlined that some probe includes suspicious securities scam; the regulators are also looking across various violations such as failing to register a product or service before it was delivered to clients.

President of NASSA, Michael Pieciak mentioned,

Recent headlines of potentially new cryptocurrency products and the near tripling in value of some cryptocurrencies and the sharp increase in market capitalization for all cryptocurrencies are again creating an environment that attracts white-collar criminals, bad actors and other promoters of illegal and fraudulent securities schemes.

Further, Michael said clients should be alert and mindful of threats, especially when getting involved in crypto investment services.

NASSA also informed that video program named ‘Get in the Know’ shows regular cryptocurrency investment scams and how to safeguard from becoming a target. It’s a program to help users to be mindful of types of scam being executed.

Pieciak suggested users before investing in the crypto product. They should investigate it. Also, be careful when organizers say offering does not require to be registered as a security.

He further advised, ‘contact your state or provincial securities regulator with any concerns before parting with your hard-earned money.’

Apart from this NASSA cautions client to be careful of the following 3 points:-

  1. Volatility – digital currency markets are highly unstable, makes maximum investors difficult to achieve long term retirement or savings objectives.
  2. No recourse- digital currency and most crypto investments are exposed to regulatory supervision and there may be no support when crypto disappears because of scam or cybersecurity violation.
  3. Non-traceable- digital currency and crypto investment are only available over the internet. Hackers could be found anywhere across the world and maybe nearly impossible to track and recover missing funds via the courts.

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