Minnesota Begins International Cryptocurrency Crackdown

The Minnesota Commerce Department announced Wednesday that it is participating in an international crackdown on fraudulent Initial Coin Offerings (ICOs) and cryptocurrency scams. The department is also warning Minnesota investors that cryptocurrency investment offerings are very risky and highly vulnerable to fraud.

The enforcement sweep is being coordinated by the North American Securities Administrators Association (NASAA), which represents state and provincial securities regulators in the United States, Canada and Mexico.

“Fraudulent cryptocurrency investments are a major threat to Main Street investors,” said Commerce Commissioner Jessica Looman in a statement. Looman's agency said it currently has several ongoing cryptocurrency-related investigations.

“We are committed to protecting Minnesotans from scams involving these investments, and we are working closely with other agencies to stop crypto-criminals who use these schemes to steal real money from people.”

An ICO is an investment offering used by an individual or business startup to raise funds for a new cryptocurrency venture. Other schemes offer ways for people to buy and sell cryptocurrency assets.

With fewer investor protections than in traditional securities markets, authorities say these investments have significant potential for fraud and manipulation.

The Commerce Department has joined with more than 40 other state and provincial securities regulators in the United States and Canada in “Operation Cryptosweep,” resulting in nearly 70 investigations and 34 pending or completed enforcement actions since the beginning of May.

These actions are in addition to more than a dozen enforcement actions previously undertaken by NASAA members related to these types of products.

Authorities say an important component of “Operation Cryptosweep” is raising public awareness of the risks associated with ICOs and cryptocurrency investments.

“Cryptocurrency is the new frontier for investment fraud,” said Looman. “Investors should approach these offerings with extreme caution, because there is little chance to get your money back when it is a fraud.”

If you think you may be the victim of an investment fraud or scam, contact the Minnesota Commerce Department’s Consumer Services Center by email or by phone at (651) 539-1600 or 800-657-3602 (Greater Minnesota).

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