383 Diablo Rd. Suite 217 - Danville, CA 94526
(925) 314 - 9700 (866) 302 - 5415

Five Firms Hit by ‘Crypto-Sweep’ in Alabama as Regulators Step up Operation

Cease and desist letters have been sent to five crypto companies operating in Alabama, as part of the ongoing “Operation Crypto-Sweep.” The campaign, led by the North American Securities Administrators Association, is targeting ICO projects and blockchain startups suspected of fraudulent activities and violations of existing securities laws. Actions have been taken already by NASAA members in a number of states and provinces in North America.

Three LA-Based Companies Among the Targeted

The Alabama Security Commission (ASC) has recently taken enforcement actions in five investigations as part of “Operation Crypto-Sweep.” The international crackdown on fraudulent Initial Coin Offerings (ICOs) and crypto-related investment products is coordinated by the North American Securities Administrators Association (NASAA), a voluntary organization whose membership consists of 67 state, provincial, and territorial securities administrators in the US, Canada and Mexico, of which the ASC is also a member. The Commission has issued a total of five cease and desist orders “to protect Alabamians”, according to an official announcement.

Five Firms Hit by ‘Crypto-Sweep’ in Alabama as Regulators Step up OperationThe respondents are ICO organizations that have been targeting residents in more than one state. That’s why Alabama regulators have teamed up with their colleagues from Texas and New Jersey to go after the firms implicated in illegally soliciting investors. “Fraudulent activity involving ICOs and cryptocurrency-related investment products is a significant threat to Main Street investors in Alabama,” said ASC director Joseph Borg. The Commission is “committed to swiftly and effectively protecting investors from schemes and scams involving these products,” he added, noting that the measures taken are just the tip of the iceberg.

Cease and desist letters have been sent to three Los Angeles based companies. Extrabit Ltd., a purported crypto mining operation, offered through an ad the project’s EXB token at half price, conducting, according to regulators, an illegal and unregistered securities offering. Potential investors were told they had to spend $20,000 in the presale and expect the tokens within 48 hours. A 185 percent quarterly return was promised to those keeping a constant positive EXB balance. Returns were said to come from mining bitcoin, monero and zcash. The second firm form California, Leverage, has advertised itself as a crypto lending platform offering to investors a variable, daily interest. This case is again about an unlicensed security, the ASC said. Pool Trade is the third sanctioned company from LA.

Platinum Coin, another of the targeted crypto businesses, from Miami, Florida, has been caught offering investors an annual return of at least 320 percent. It has been issued with cease and desist order based on the same accusations – conducting sales of unregistered securities and making unrealistic promises. The fifth recipient of a cease and desist letter is an entity that purports to conduct business as an Internet-based escrow company. According to the ASC announcement, Chain Group Escrow Service is based in Kirkland, Washington.

Regulators Across North America Join “Crypto-Sweep”

Regulatory authorities in other states have also taken similar actions against dubious crypto businesses. The blockchain firm Shipchain, an operator of an etherium-based logistics platform, has received a cease and desist order from the Office of the Attorney General of South Carolina. The startup has been trying to sell its Shipcoin tokens without proper registration in the state, advertising its project to local investors. The state’s legislation treats investment contracts as securities and the tokens should have been registered as such. A permanent cease and desist order has been delivered to a company in neighboring North Carolina – Power Mining Pool. Another firm, Adosia LLC, has received a consent order in the state.

 

According to NASAA’s website, cease and desist orders and letters have been sent so far to crypto and blockchain businesses in the following states: Missouri, Texas, Colorado, Maryland, New Jersey, and Ohio, as well as in the Canadian provinces of Quebec, British Columbia and New Brunswick.

“Operation Crypto-Sweep” is coordinated by NASAA which has united the efforts of more than 40 state and provincial securities regulators in the US and Canada for a series of investigations into ICOs and crypto-related investment products. There have been more than 70 inquiries and investigations so far, as well as 35 pending or completed enforcement actions since the beginning of May. The campaign was recently applauded by the chairman of the US Securities and Exchange Commission (SEC), Jay Clayton, as news.Bitcoin.com reported.

A partial list of clients served