U.S. State Securities Regulators Investigate Digital Assets

U.S. state securities regulators report that most investigations and enforcement actions in 2023 are related to technology and digital assets.

Key Findings

• New Investigations: 343 cases involving digital assets, 144 cases involving staking, and 205 social media fraud cases were opened in 2023. These numbers mark a significant increase from 2022, according to the North American Securities Administrators Association (NASAA).
• Other Cases: Throughout the year, regulators reported 214 cases related to stocks and equities and 145 cases regarding Ponzi and pyramid schemes.

Leslie Van Buskirk, NASAA president, notes that fraudsters exploit technological innovation and social media to deceive investors. The agency highlighted the rise in complaints related to scams, particularly "pig butchering" schemes, which involve gaining victims' trust to extract large sums of money.

The NASAA is working alongside the U.S. Securities and Exchange Commission (SEC), which has targeted the crypto industry, exemplified by charges against TradeStation Crypto, Inc. for failing to register a crypto lending product.

Regulators are also scrutinizing interest and earn products, high-yield investments, and staking, indicating that many states see staking services as unregistered securities offerings. The SEC shares this perspective.

Future Focus

The SEC plans to intensify its crypto oversight in 2025, focusing on entities offering crypto-asset-related services and products categorized as securities, including recently approved spot Bitcoin and Ether exchange-traded products.