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US Regulator Initiates Crackdown on Fraudulent ICOs in “Operation Cryptosweep”
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A US state regulatory is cracking down on two New Jersey-based ICOs for having “fraudulent unregistered securities.” The cease and desist orders are part of “Operation Cryptosweep.”
Two fraudulent New Jersey-based ICOs are being hit in a crackdown in the state by regulators. Two investment schemes titled “Zoptax LLC” and “Unocall” are being targetted by the state’s Bureau of Securities.
“Today’s action demonstrates that our Bureau of Securities stands ready to enforce our investor protection laws in cases involving initial coin offerings and cryptocurrency-related investment schemes,” Attorney General Gurbir S. Grewal told reporters.
Zoptax has been accused of offering unregistered securities in the form of an ICO. It was hoping to raise up to $3.4M through the offering. Similarly, Unocall was also looking to launch its own ICO with a “guaranteed interest of 0.18 – 0.88 percent per day.” It would be issuing its own Unocall tokens. The fraudulent scheme even had its own mobile wallet called UNOpay.
The taskforce responsible for the crackdown was first set up in April 2018 and has been responsible for 130 cryptocurrency-related investigations thus far. 35 enforcement actions have been brought to completion since its establishment.
It’s still unclear whether “Operation Cryptosweep” will continue, but there are likely more fraudulent ICOs yet to be brought to justice. It’s yet another indication that ICOs will likely completely die out in a year’s time. Luckily, security token offerings provide us with a better, compliant alternative.
Do you believe that the crackdown will expand to include more cases? Let us know your thoughts on this story in the comments down below.
Image courtesy of NJ.gov.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
