American state regulators announced that they have expanded their “Operation Cryptosweep” investigation to include 200 initial coin offerings.

The Cryptosweep task force was convened earlier this year by the North American Securities Administrators Association (NASAA) – a group of US and Canadian state-level securities regulators who work to protect investors from fraud – to stop ‘persistent exploitation by crypto fraudsters.’ In May NASAA said it had launched 70 investigations in conjunction with the the US Securities and Exchange Commission and the Commodity Futures Trading Commission and that these actions were “just the tip of the iceberg.”

Yesterday it announced that now “more than 200 active investigations of Initial Coin Offerings (ICOs) and crypto-currency-related investment products are currently underway” and says that since May, there have been 46 enforcement actions involving ICOs or crypto-currency-related investment products.

“State and provincial securities regulators are committing significant regulatory resources to protect investors from financial harm involving fraudulent ICOs and cryptocurrency-related investment products and also are raising awareness among industry participants of their regulatory responsibilities,” said NASAA President and Alabama Securities Commission Director Joseph P. Borg.

Borg noted that while some of the enforcement investigations initiated as part of Operation Cryptosweep involve suspected securities fraud, regulators are finding many other potential violations of state and provincial securities laws, including failure to properly register a product before it was offered to investors.

“While not every ICO or cryptocurrency-related investment is a fraud, it is important for individuals and firms selling these products to be mindful that they are not doing so in a vacuum; state and provincial laws or regulations may apply, especially securities laws… Furthermore, a strong culture of compliance should be in place before, not after, these products are marketed to investors.”

“Be cautious when dealing with promoters who claim their ICO offering is exempt from securities registration but do not ask about your income, net worth or level of investing sophistication,” Borg said. “Do your homework and contact your state or provincial securities regulator with any concerns before parting with your hard-earned money – afterwards may be too late.”

The US Securities and Exchange Commission argues that while crypto-currencies per se are not securities, ICOs are, and SEC Chairman Jay Clayton said in June the job of the Commission is to protect “the integrity of the market.”

“The behavior we see in this is pretty bad,” said Clayton. “We’ve got guys with bags of cash headed to the border. That’s not our securities market.”

In June, the SEC launched a fake ICO website that it called HoweyCoins.com.

“Combining the two most growth-oriented segments of the digital economy, blockchain technology and travel,” read the website blurb, “HoweyCoin is the newest and only coin offering that captures the magic of coin trading profits AND the excitement and guaranteed returns of the travel industry.”

However, anyone who clicked on the ‘Buy Coins Now’ button was led to investor education tools and tips from the SEC and other financial regulators and the name, HoweyCoin, was a nod to the landmark 1946 US Supreme Court decision, SEC vs WJ Howey Co, which held that a transaction is an investment contract, or security, if “a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

The precedent has become popularly known as the Howey Test and remains central to the debate, in the US and beyond, over why and how digital currencies should be regulated.

Clayton made the SEC position clear in June when he said that under the Howey Test CNBC, all ICOs constitute a form of security, and “if it’s a security, we’re regulating it.”