The head of the SEC has released a statement today in support of yesterday’s ‘cryptosweep’ — a joint effort between 40 U.S. and Canadian financial regulators to curb fraud in the cryptocurrency and ICO markets.
SEC’s Clayton: Public Statement
Jay Clayton, the U.S. Securities and Exchange Commission (SEC) chairman posted posted the public statement on the agency’s website.
In it, he discusses the importance of taking proactive measures to protect ‘Main Street investors,’ explains the importance of concise regulation in financial markets, and talks about the recent ‘fake ICO’ site, HoweyCoin. This was launched by the SEC’s Office of Investor Education and Advocacy to alert consumers to common red flags associated with the fundraising method.
“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. These state and provincial regulators play a critical role in protecting Main Street investors,” Clayton writes.
Operation Cryptosweep was announced yesterday. The goal of the coordinated effort from the North American Securities Administrators Association (NASAA) is to target scams and fraudulent offerings in the cryptocurrency space.
The crackdown will see over 40 U.S. and Canadian regulators united with the common goal of ridding the cryptocurrency industry of fraudulent ICOs and other cryptocurrency investment opportunities.
President of the NASAA, Joe Borg, highlighted the importance of regulators sharing resources to successfully overcome the issue at hand. He also mentioned that his organization will be working with the U.S. Commodity Futures Trading Commission (CFTC), along with the SEC. ‘We all have limited resources. You are going to see a lot more collaboration,’ Borg reiterated.
Clayton describes Operation Cryptosweep as follows:
“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 […] Information-sharing is key to cooperative enforcement operations, and by working together, we can ensure that the rapidly evolving financial technology space has the appropriate oversight to pursue bad actors, protect market participants, and allow for market-enhancing innovation.”
The SEC’s HoweyCoin
These coordinated moves by U.S. regulators come less than a week after the SEC created their own ‘fake ICO‘ website, which was developed in attempts to show potential investors the obvious signs of ICO scams.
On the site, HoweyCoin — which takes its name from the 1946 four-part Howey test, created to determine what qualifies as a security — is presented as a way to invest in the luxury travel market, even promising a 25% discount to gold level investors.
The agency’s site uses the fake ICO to highlight red flags which potential investors should keep an eye out for, including: celebrity endorsements, promises of exceptionally high returns, (false) claims of regulatory compliance, and options to pay with credit cards.
The top of the page warns viewers: “If You Responded To An Investment Offer Like This, You Could Have Been Scammed – HoweyCoins Are Completely Fake!”
Featured image from Shutterstock.
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