The current Operation Crypto-Sweep has recently sent cease and desist letters to five cryptocurrency firms being run in the southeastern state of Alabama. This crypto-sweep is spearheaded by the North American Securities Administration Association (NASAA), aimed at ICO projects and blockchain startups suspected of fraudulent activities in addition to violations of existing securities laws. Members of the NASAA in several states and provinces have already taken actions in the operation.
Sometime this week, The Alabama Security Commission (ASC) has taken prosecution actions in five investigations as part of Operation Crypto-Sweep. The NASAA has set up an investigation to put an end to fraudulent Initial Coin Offerings (ICOs) and also crypto-related investment products. The NASAA is a voluntary organization whose membership includes 67 state, provincial, and territorial securities administrators in the US, Canada, and Mexico. The ASC is also a member. As stated in the official announcement: “The Commission has issued a total of five cease and desist orders to protect Alabamians.”
Joseph Borg, the director of the ASC noted that fraudulent activity involving ICOs and cryptocurrency-related investment products is a significant threat to Main Street investors in Alabama. He also added that the Commission is committed to swiftly and effectively protecting investors from schemes and scams involving these products. The accused ICO organizations have been targeting residents in more than one state. That is the main reason why Alabama regulators have teamed up with their colleagues from Texas and New Jersey to go after the firms involved in illegally soliciting investors.
Up to three firms that are based in Los Angeles were sent cease and desist letters. According to the regulators Extrabit LTD, a purported crypto mining operation, offered through an ad the project’s EXB token at half price, conducting an illegal and unregistered securities offering. Extrabit Ltd stated that if investors spent $20,000 in the presale and expect the token within 48 hours, a 185 percent quarterly return was promised to those keeping a constant positive EXB balance. The second LA-based company is Leverage, which advertised itself as a crypto lending platform offering to investors a variable, daily interest. The ASC stated that this case is again about an unlicensed security. The third sanctioned company from LA is Pool Trade.
The fourth ICO organization is Platinum Coin, from Miami, Florida has been caught offering investors an annual return of at least 320 percent. It has been accused of conducting sales of unregistered securities and making unrealistic promises. Finally, the fifth recipient of a cease and desist letter is a firm that purports to conduct business as an Internet-based escrow company. In line with the ASC announcement, Chain Group Escrow Service is based in Kirkland, Washington.