TDCI Securities Division Participates in Coordinated International Crypto Crackdown

Agency Will Issue Investor Alerts To Raise Awareness of Cryptocurrency Scams
Monday, May 21, 2018 | 09:02am

NASHVILLE – The Tennessee Department of Commerce & Insurance (TDCI) today announced its support for an international crackdown on fraudulent Initial Coin Offerings (ICOs) and cryptocurrency-related investment products. The sweep is being coordinated by the North American Securities Administrators Association (NASAA), of which TDCI is a member.

As part of “Operation Cryptosweep,” TDCI will issue a series of consumer alerts during the week of May 21-25 to raise public awareness and urge caution when investing in cryptocurrencies. Cryptocurrencies are a medium of exchange that are created and stored electronically in the blockchain, a distributed public database that keeps a permanent record of digital transactions. (Current common cryptocurrencies include Bitcoin, Ethereum and Litecoin.) Unlike traditional currency, these alternatives have no physical form and typically are not backed by tangible assets.

“Fraudulent activity involving ICOs and cryptocurrency-related investment products is a significant threat to Main Street investors in Tennessee,” said TDCI Commissioner Julie Mix McPeak. “Cryptocriminals need to know that we are committed to swiftly and effectively protecting investors from schemes and scams involving these products.”

TDCI 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 inquiries and investigations and 35 pending or completed enforcement actions since the beginning of the month. NASAA members are conducting additional investigations into potentially fraudulent conduct that may result in additional enforcement actions. These actions are in addition to more than a dozen enforcement actions previously undertaken by NASAA members regarding these types of products.

In April 2018, NASAA organized a task force of its member state and provincial securities regulators to begin a coordinated series of investigations into ICOs and cryptocurrency-related investment products. Regulators identified many cryptocurrency-related products and as part of its work, the task force identified hundreds of ICOs in the final stages of preparation before being launched to the public. These pending ICOs were advertised and listed on ICO aggregation sites to attract investor interest. Many have been examined and some were determined to warrant further investigation. A number of these investigations are ongoing and others resulted in enforcement actions announced today.

“The actions announced today are just the tip of the iceberg,” said TDCI Assistant Commissioner Frank Borger-Gilligan, noting that NASAA’s task force also found approximately 30,000 crypto-related domain name registrations, the vast majority of which appeared in 2017 and 2018.

A critical component of “Operation Cryptosweep” is raising public awareness of the risks associated with ICOs and cryptocurrency-related investment products.

“Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution,” Borger-Gilligan said.

For more information about ICOs and cryptocurrencies, contact the agency at (615) 741-5900 or by email at