Con artists have long followed the headlines to use current events to give their schemes an air of legitimacy. The COVID-19 pandemic is no exception.
Modeled after NASAA’s successful Operation Cryptosweep of 2018, NASAA’s COVID-19 Enforcement Task Force is led by NASAA’s Enforcement Section and its Enforcement Technology Project Group. The Task Force is using online investigative techniques to identify websites and social media posts that may be offering or promoting fraudulent offerings, investment frauds, or improper unregistered regulated activities.
As part of its work, the task force is examining a spike in internet domain names linked to the pandemic. The task force has identified as many as 200,000 coronavirus-related domains as of April 20, 2020. Most of these domain names appear to have been created since
the beginning of 2020.
“The objective of the task force is to proactively detect COVID-19-related threats to investors, including but not limited to fraudulent offerings, investment frauds, and unregistered regulated activities, within the jurisdiction of NASAA member states and provinces, and to disrupt and deter those activities.
OBJECTIVES
RESULTS
(As of December 16, 2020)
DATA
| Schemes Detected | ||
|---|---|---|
| Investment Related | 168 | |
| Non-investment Related | 94 | |
| TOTAL | 262 |
| Actions Taken | 250 as of December 16, 2020 |
|---|---|
| Cease-and-Desist Orders | 41 |
| Investor Alerts | 39 |
| Referrals of Suspected Non-investment Schemes to Other Regulators | 97 |
| Referrals to Third-Parties for Action (hosting, social media companies) | 29 |
| Referrals of Suspected Investment Schemes to Other Regulators | 21 |
| Caution Letters | 13 |
| Administrative Actions | 7 |
| Information Demads | 2 |
| Undertakings Obtained | 1 |
COMMON CHARACTERISTICS
Many fraudulent offerings detected by the task force share several common characteristics:
- Prey on fear and anxiety;
- Promote safety amid uncertainty;
- Involve cryptocurrencies or cryptocurrency-related investment products, foreign exchange (forex); products unfamiliar to inexperienced retail investors.
- Refer to returns as “passive income” or “cash flow” promising monthly payments to appeal to cash-strapped investors.
Case Examples
The following are some examples of actions taken by task force members:
- Highgoldminings.com (British Columbia Securities Commission)
- ULTRA BTC Mining (Alabama Securities Commission and Texas State Securities Board)
- Coronafever Invest (Alabama Securities Commission)
- IFC Markets (Manitoba Securities Commission)
- Mirror Trading International (Texas State Securities Board)
- Kenzley Ramos (Texas State Securities Board)
- James “Stormy” Walsh (Texas State Securities Board)
- Mark Anthony Morrow (Washington Securities Division)
- Mark Baxter (Massachusetts Securities Division)
- Corona BIllionaire (Ohio Division of Securities)
- Crestview Exploration (Ontario Securities Commission)
