The US Securities and Exchange Commission (SEC) has released a new alert, warning investors about the risk of fraud in the digital currency industry.
In its latest guidance, the SEC, a federal organisation tasked with enforcing US securities law, advised investors to be wary of promises of large returns on investments in bitcoin ventures and schemes:
"A new product, technology, or innovation - such as bitcoin - has the potential to give rise both to frauds and high-risk investment opportunities."
According to the SEC, there are several warnings signs that investors should watch out for when considering investments in bitcoin ventures.
Specifically, it noted that investors should be wary of investment offers that come from unlicensed or unsolicited sources. Sales pitches that seem overly aggressive or that guarantee high returns, the release said, should be warning signs for every investor.
The SEC indicated that investors who generated significant earnings during bitcoin's price boom in 2013 are particularly at risk of investment fraud. Additionally, participants in bitcoin forums like Bitcoin Talk face the risk of getting involved with fraudulent investments, such as an initial public offering (IPO) scheme.
The organisation also noted in the alert that the hype surrounding bitcoin may make it harder for investors to determine whether a particular investment opportunity is fraudulent:
"Potential investors can be easily enticed with the promise of high returns in a new investment space and also may be less skeptical when assessing something novel, new and cutting-edge."
The investor alert mirrors a report issued last year by the SEC, which explained the risk of Ponzi schemes involving digital currency. At the time, the SEC expressed concern that the rise in digital currency would lead to greater risks for investors because of a lack of regulatory guidance.
In recent months, the SEC has begun looking into potential fraud in the bitcoin marketplace as well.
The organization is reportedly investigating bitcoin websites. In March, the SEC began looking into the bitcoin securities exchange MPex and the gambling website SatoshiDice.
Image via Wikipedia
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
Analysis: What 2019 Could Bring for Bitcoin
Trading in altcoins was a big part of what made Bitcoin price spike towards the end of 2017. A section of the crypto space argues that while altcoins helped Bitcoin’s market cap swell, they also bro
Bitcoin Cash Going Down as Stellar Warms up
Bitcoin Cash’s market cap has been cut in half since the Nov. 15 hardfork which birthed the Bitcoin ABC and Bitcoin SV chains. Now at a mere $3.5 bln and a unit price of ~$201 as at the time of writ
300k User Data from Chinese Auto Finance Platform Sold For One Bitcoin on Dark Web
It is revealed that 300,000 pieces of user data from a Chinese auto finance platform Jiurong were compromised and priced at one bitcoin on the dark web.
According to the leaked data posted, persona
Heyday of Bitcoin Mining Rigs Business at China’s Huaqiangbei is Over Amid Crypto Market Carnage
Bitcoin price slumped to a 13-month low of about $4,300 on Wednesday, making mining the world’s leading digital currency an unprofitable business. A lot of mall miners, mining rigs dealers and minin
Dialogue with Bitcoin Evangelist in Latin America: RSK Labs CEO Diego on Crypto Industry
Diego Gutierrez is the CEO at Koibanx and president of Bitcoin Argentina NGO. In addition, Diego also serves as the CEO of Rootstock/RSK Labs, a smart contract platform built on top of bitcoin.
China’s Bitcoin Billionaire Zhao Dong : Bitcoin Price to Hit $50,000 in Three Years—Now Is the Time to Buy the Dip
Despite Bitcoin’s latest crash and a real chance that its price will go much lower, Zhao Dong, prominent Chinese OTC trader and founder of Dfund, remains bullish on the the world’s biggest cryptoc
Bitcoin Miners Sold by Kilo in China Amid Cryptocurrency Crash
The leading cryptocurrency bitcoin once fell below $4,300 on the afternoon of November 20 – down more than 17% on a 24-hour basis and hitting a 13-month low since October 2017. Great losses are seen
Xiao Lei: 3 Main Reasons of the “Unreasonable” Bitcoin Price Crash
Cryptocurrency markets experienced a havoc in the past few days. Bitcoin, the uncrowned king in the crypto world, has fell as much as 30% over the past two weeks, while other major tokens are all suff