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Global Cooperation is a must in the fight against illegal ICOs Says SEC

Global Cooperation is a must in the fight against illegal ICOs Says SEC

The exponential growth of the ICO sector from raising a mere $100 million in 2016 to raising $22 billion in 2018 has not been a smooth growth. The growth has been mannered with fraudsters who end up walking away with investor’s money. With some of these ICO investors coming from the US and other countries both local and international regulators have to work together to protect the investors.

Steven Peikin co-director of the Securities and Exchange Commission enforcement division aired his sentiments about regulators working together while reading his speech during the Harvard Law School’s Program on International Financial System. He said,

“Investors in these ICOs are on many occasions in different areas with many coming from outside the US and cooperation between local and international regulators is vital in the fight against fraudsters. Through agencies working together, we will have the upper hand when it comes to investigations and where appropriate recommend legal action to be taken.”

Massive Growth is Blinding Investors from Risks

Besides all the above investors, on the other hand, are blinded by the growth of the cryptocurrency sector in such a short period. In addition to that, the opportunities that come with blockchain technology is blinding investors from the risks that come with investing in this sector. Furthermore according to Pekin the 22,000% massive growth of investments in the ICO sector hides the fact that these digital assets are high risks investment vehicles. Pekin further explained and said,

“Some of the ICO organizers come out as fraudster’s right from the start. They lack track records, don’t have viable business models/products and lack the resources and capacity to set up top-notch security features to secure virtual currencies from cybercriminals.”

To paint a wider picture of how fraudsters are taking advantage of the lack of international cooperation Pekin used the example of Dominic Lacroix founder behind PlexCoin. Lacroix is a Canadian citizen who walked away with $15 million from investors in the US. On reaching out to their counterparts in Canada SEC found out that Lacroix had a history of running such scams in Quebec.

But all is not lost before Pekin remarks of agencies working together the US and their Canadian counterparts had already launched investigations into 70 fraud related ICOs and crypto firms. The operation dubbed Operation Crypto Sweep led to the North American Securities Administrators Association issuing cease and desist orders to sham crypto firms under its purview. In total 40 jurisdictions in Canada and the US received the orders.