With cryptocurrency transactions hitting an all-time high in recent months, it’s inevitable that we would also see some instances of fraud. Such is the nature of financial booms and regulations, there is a check and balance that often happens between new business and government regulations. Alabama, along with several other states, have sent cease and desist letters to five cryptocurrency companies suspected of violating securities fraud laws, as part of a wider crackdown known as “Operation Crypto-Sweep.”
The intent behind this action by the Alabama Security Commission is to protect consumers from instances of fraud. While the ASC only holds jurisdiction in Alabama, three of the cease and desist letters went to Los Angeles based firms, who were accused of promoting ICOs and cryptocurrency schemes within the state. These actions come as the latest wave of enforcement action from financial regulators that are keen to clean up the cryptocurrency and ICO space.
Levels of detected fraudulent activity in the space reached all-time highs in 2017, so the developments come amidst a flurry of similar measures from securities authorities nationwide. When investing, whether with a traditional financial form or in cryptocurrency, consumers need to invest wisely and do their research prior to committing financially. Even with the ASC on the lookout for fraudulent activities, it often isn’t noticed until after the fact. For many looking to invest, it could be too late and time to attempt to recoup their losses.
Since cryptocurrency trading is fairly new to the average investor, one may not be sure what to look for. However, trust your gut and do research to find information about a firm prior to investing. There are steps that can be taken after the fact if you believe you have been defrauded by firms promising high-yield earnings.