Cryptocurrency: Warnings by Government Agencies

Australia

Initial Coin Offerings (ICOs)

Australia Securities & Investments Commission (ASIC)

ICOs are highly speculative investments that are mostly unregulated, and many have turned out to be scams. If the ICO is issued by an overseas entity, it will be even harder to get your money back if it turns out to be a scam. Token values can fluctuate drastically and it’s possible for a computer hacker to steal them.

Before you decide to invest in an ICO, you’ll need to do a lot of research. Look for forums or websites that explain the product in detail and present a balanced perspective.

Canada

CSA Investor Alert: Caution Urged for Canadians Investing with Crypto-Asset Trading Platforms

Canadian Securities Administrators/Autorités canadiennes en valeurs mobilières (CSA/ACVM)

Investors should be cautious when dealing with any crypto-asset trading platform because key investor protections may not be in place.  These key investor protections include secure handling of client funds, appropriate safekeeping and protection of assets, confidentiality safeguards for personal information, reliable processes for pricing and trading in crypto assets, appropriate investor pre-trade disclosures, and measures against market manipulation and other harmful practices.

European Union

Advice: Initial Coin Offerings and Crypto-Assets

European Securities and Markets Authority (ESMA)

Although many crypto-assets may be available for trading on specialised trading platforms after issuance, their liquidity is typically shallow and investors may have a limited possibility of liquidating an investment. The information about the project and the issuer may also be limited considering that they are usually at a very early stage of development.  Another issue has to do with the variety of crypto-assets issued and the different rights attached to them, which may not be easily understood by investors, and also the fact that there may be risks that are specific to their underlying technology as discussed below.

There have also been widespread reports and concerns around fraudulent ICOs, whereby crypto-assets either do not exist or issuer/developers disappear after the ICO. These could represent up to 80% of ICOs according to some sources. 

United Kingdom

Cryptocurrency investment scams

Financial Conduct Authority (FCA)

UK consumers are being increasingly targeted by cryptocurrency-related investment scams.

Cryptocurrencies (such as Bitcoin or Ether) themselves are not currently regulated in the UK. So the transfer, purchase and sale of cryptocurrencies, including the operation of a cryptocurrency exchange, all fall outside the regulatory remit of the Financial Conduct Authority (FCA).

However some types of cryptocurrency products may be or may involve regulated investments depending on their nature and how they are structured. For example, firms that sell regulated investments with an underlying cryptocurrency element may need to be authorised by the FCA to do so…

The firms operating the scams are usually based outside the UK but will claim to have a UK presence, often a prestigious City of London address.

Scam firms can manipulate software to distort prices and investment returns. They may scam people into buying non-existent cryptocurrencies. They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred.

Well-known names being used in cryptocurrency scams

National Fraud & Cyber Crime Reporting Center (ActionFraud)

Fraudulent websites claiming to offer cryptocurrency investments are using images and fabricating recommendations from prominent individuals such as Deborah Meaden from the BBC’s Dragons’ Den and Martin Lewis, the founder of MoneySavingExpert.com, without their consent.

The adverts are placed on social media and other websites and use images of these individuals to promote fraudulent cryptocurrency investments. Clicking on the advert takes you to the full article where their images are presented along with fake quotes recommending that you make investments with the fraudulent company in cryptocurrencies such as Bitcoin. 

Alternatively, clicking on the advert will take you to a page where you are required to input your contact details. The suspect company will then phone you and persuade you to invest.

United States

What to Know About Cryptocurrency

U.S. Federal Trade Commission (FTC)

As more people get interested in cryptocurrency, scammers are finding more ways to use it. For example, scammers might offer investment and business “opportunities,” promising to double your investment or give you financial freedom.

Watch out for anyone who:


* guarantees that you’ll make money

* promises big payouts that will double your money in a short time

* promises free money in dollars or cryptocurrency

* makes claims about their company that are not clear