State Regulators Announce Cryptocurrency Crackdown

On May 21, the North American Securities Administrators Association (“NASAA”) announced a massive and coordinated series of enforcement actions by U.S. state and Canadian provincial regulators to combat fraudulent practices involving cryptocurrency-related investment products. As cryptocurrencies have gained in popularity, companies have increasingly turned to a method known as an initial coin offering (“ICO”) to raise capital. ICOs, however, are ripe for potential fraud. As the Washington Post has explained, “consumers face higher risks of being misled at a time when the intense demand for bitcoin has prompted many retail investors to take extreme steps to gain exposure to the currency…” Given ICOs’ high risk of fraud, state regulators are increasingly scrutinizing such offerings as well as other practices involving cryptocurrency-related investments. In fact, according to NASAA, state regulators have opened nearly 70 inquiries…

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