The Texas State Securities Board’s investigators used to browse classified newspaper ads and monitor lunch seminars for investment scams.
Today, they are infiltrating chat rooms and using burner phones and fake social media profiles to root out fraud.
The high tech scope of their work, sometimes involving global players, was highlighted when Texas and four other states brought actions against a metaverse casino accused of running an NFT sales scam with alleged ties to Russia.
“There has been an absolute change in our work over the last couple of years, and I think it’s fair to say in state securities regulation,” said Joe Rotunda, the director of enforcement at the Texas agency, whose investigations and actions on digital assets account for about 10% of enforcement workload.
State securities regulators are taking on more ambitious roles in crypto enforcement as federal agencies grapple with the new technology and unclear jurisdiction. The SEC is expected to ramp up enforcement. But state regulators will continue to evolve to align their work with their federal counterparts, industry watchers say.
States brought 89 enforcement actions in 2021, a 71% year-on-year increase, according to a recent report by the North American Securities Administrators Association (NASAA). The number of new investigations launched by states rose to nearly 215 last year from 125 a year earlier, the report said.
The Securities and Exchange Commission, by comparison, brought a total of 97…
