Chairman of the U.S. Securities and Exchanges Commission (SEC), Jay Clayton applauded state-level regulators throughout the United States and Canada for their efforts to curb cryptocurrency scams through their combined task force-“Operation Crypto Sweep.”
“I applaud our fellow regulators in the United States and Canada who are coordinating and participating in efforts to police fraud in the Initial Coin Offering (ICO) markets,” Clayton remarked in a statement released May 22. “These state and provincial regulators play a critical role in protecting Main Street investors.”
“The enforcement actions being announced by NASAA should be a strong warning to would-be fraudsters in this space that many sets of eyes are watching, and that regulators are coordinating on an international level to take strong actions to deter and stop fraud.”
Launched in April 2018, Operation Crypto Sweep was initiated under the inaccuracy of the North American Securities Administrators Association (NASAA).
The operation in the past month has opened 70 investigations into possible cryptocurrency frauds and fake ICOs in 40 jurisdictions across the United States and Canada.
Joseph P. Borg NASAA president noted that the task force has put forward several cease-and-desist letters to potential fraudsters and promised that additional laws are yet to come. “The actions announced today are just the tip of the iceberg,” he vowed.
In his statement applauding the move, Clayton explained that when securities are sold via ICOs, state and federal securities laws cover the core assets. According to Clayton, cryptocurrency market participants who fail to go by the securities laws will be dealt with accordingly if they deceive investors.
“Unfortunately, some market participants seem to believe that the use of new technology provides a basis for ignoring the core principles of our securities laws,” Clayton said. “But there is absolutely no case for abandoning our core principles.”
Clayton went ahead to talk about the fake ICO website the SEC launched to help investors understand how to avoid ICO scams. The website for the fake HoweyCoins ICO has its own white paper, customer testimonials and fake celebrity validations.
“The offering is not real. It is a fake,” Clayton explained. “But it does illustrate the common ‘red flags’ of fraud in the ICO markets and how little work it takes to engage in such a fraud.”
Earlier on, Clayton has said that he does not doubt bitcoin; he is just mindful.
Clayton in April 2018 noted that aide from prediction, the SEC is not of the opinion that all initial coin offerings are scams. “Absolutely not, “he noted.
Clayton expressed that it is quite essential to get rid of all scams in the cryptocurrency market and highlighted that regulatory checks will greatly benefit the industry by taking out fraudsters who are tarnishing the name of the entire space.
He went on to explain that getting rid of fraudsters at an early stage will ensure that the government will not have to make a difficult decision that will affect the promising industry.
“If we don’t stop the fraudsters, there is a serious risk that the regulatory pendulum – the regulatory actions – will be so severe that they will restrict the capacity of this new security,” he said.
He also shared a similar opinion of bitcoin bulls the Winklevoss twins, Tyler and Cameron who warmed up to the idea of the regulatory oversight.
“My complaint would be that regulators haven’t moved quick enough to make clear frameworks and paths forward for legitimate operators,” said Tyler Winklevoss, the CEO of Gemini. “As long as jurisdictions strike the right balance, we think that it’s going to be a huge boon and win for cryptocurrencies.”