What is Operation Crypto Sweep?
What is Operation Crypto Sweep?
An Initial Coin Offering (ICO) is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for ether (ETH) or other cryptocurrencies. This is similar to an Initial Public Offering (IPO), where investors purchase shares of a company.
ICOs are easy to structure because tokens made on top of the Ethereum platform follow the ERC20 Token Standard or NEP5 on top of the NEO platform. Most ICOs work by having investors send funds to a smart contract and distributes an equivalent value in the new token at a later point in time.
This model of raising a large amount of fiat upfront to cover investment expenses and growth is great for driving innovation, but turns ugly when malicious parties get involved. How do you discern between a legit team that is trying to create the next breakthrough Dapp from a malicious team that is running a get rich scheme?
Enter Operation Crypto Sweep
It is no surprise governments around want to clamp down on cryptocurrencies. How do you regulate something that was meant to be self-regulated? How do you weed out bad players from the good? We saw earlier last year China and Korea clamping down on ICOs. Now, the US is finally putting their foot down too.
Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), praised the 40+ state-level regulators across the United States and Canada for cracking down on cryptocurrency fraud through their joint task force. This was decided during the North American Securities Administrators Association (NASAA). The joint task force which aims to decrease fraud within the cryptocurrency space, Operation Crypto Sweep, was created in April 2018 and is led by NASAA.
Jay Clayton stated,
“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… Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution.”
In just the past month, the operation has launched over 70 investigations into potential cryptocurrency scams and fraudulent ICOs in 40 jurisdictions across the United States and Canada. The task force has already sent numerous cease-and-desist letters to potential scam artist and promised that more enforcement actions will be forthcoming. Additionally, they found 30,000 cryptocurrency-related domain name registrations, many of which warrant investigation.
One of the goals of Operation Crypto Sweep is to raise public awareness of the malicious parties out there preying on consumers in the unregulated cryptocurrency market. There are reports that 81% of all ICOs are scams. Securities authorities have taken the step to warn celebrities from endorsing ICOs, stating that they could be sued for aiding and abetting fraud if they promote sham ICOs. Cough… looking at you Centra (CTR).
Regulation is Good for the Cryptocurrency Markets
Operation Crypto Sweep may seem bad at first since the US government is getting involved with cracking down on crypto, it is actually good for the markets in the long run. Some short term implementations from this crackdown could be scam ICOs selling off their ETH, producing some short term pullback. However, this is great for the long term health of Ethereum and the entire cryptocurrency market in general. Malicious players are removed and ETH is redistributed back into the market. As always, we suggest you to do your own research over any cryptocurrency you may choose to invest in.
Cheers,
The Blockchain Musketeers
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Disclaimer: The information provided by the Blockchain Musketeers is our own opinions and should not be taken as investment advice, financial advice, or any other sort of advice. Nor should this information be used to determine if you should buy, sell, or hold a cryptocurrency. Please conduct your own due diligence and consult your financial advisory before making any investment decisions. Only invest money which you are willing to lose, as cryptocurrencies is not suitable for all users.