Cryptocurrency Scams: Warnings Issued by Government Agencies

Virtually all of the world’s most respected financial regulators have issued general or specific cryptocurrency warnings for investors. Check what they recommend before investing.

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 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