Despite Taking Down 90 Crypto Scams, US Regulators Recovered Just $36 Million for Victims
While it is difficult to determine the amount that investors have lost, regulators at both the federal and state level have only managed to get back US$36 million, a figure considered paltry. What has made it difficult to trace funds is the anonymous and borderless nature of cryptocurrencies.
An analysis conducted by the Journal also found that fewer cases were filed by the regulators when prices were reaching record highs compared to the number that of cases that were filed as the market took a bearish turn. Last month, the U.S. Securities and Exchange Commission (SEC) for instance filed five cases while in the entire 2017, only four cases were filed.
No Reprieve for Investors
State regulators have on the other hand brought over 70 cryptocurrency-enforcement actions in the past year, though none of the actions has resulted in investors getting their money back.
Among the most prominent alleged frauds was BitConnect which is under investigation by both the SEC and state regulators. After reaching approximately US$2.8 billion in market value, BitConnect’s flameout begun upon shutting down operations following a cease-and-desist order issued by the Texas State Securities Board (TSSB) in January as CCN reported.
At the time, the TSSB accused BitConnect of violating some sections of the Texas Securities Act which prohibit the selling of securities without the authority of the state’s Securities Commissioner.
A report released by the TSSB at the time accused BitConnect of engaging in fraud by virtue of the fact that it concealed the identities of the firm’s principals as well as failing to reveal how it would generate revenues to pay investors the promised annual interest rate of 120%.
Crypto Fraud Lawsuits
Besides the actions of the regulators, lawsuits against purported cryptocurrency fraud schemes have also increased dramatically in the past year. As CCN reported in September, the number of cryptocurrency lawsuits rose threefold in the first half of 2018 compared to the entire 2017 per a report compiled by legal analytics firm Lex Machina: