Buzz
Can’t track down that Bitcoin you bought years ago? Don’t make the mistake of compensating by pouring money into questionable companies that suddenly claim they're entering the Blockchain space, as the Financial Industry Regulatory Authority warned investors on Thursday. They might just be scams.
“Always do your due diligence before investing in any company offering cryptocurrency opportunities,” cautioned FINRA. “Don’t fall for unrealistic promises of high returns, whether they come through press releases, unsolicited emails, telemarketing, or social media posts.”
The agency went on to warn that firms promoting cryptocurrency activities could be running illegal ‘pump and dump’ schemes, where investors artificially inflate the value of a stock to sell it at a profit once demand drives up the price. In other words, be cautious before buying into companies like Long Island Iced Tea.
Here are some expert tips from FINRA to avoid falling victim to scams:
Ignore cold callers, especially the persistent ones, trying to sell you on cryptocurrency stocks. “Even if the claims seem believable, especially for low-priced stocks,” just hang up, or better yet, don’t answer at all.
No matter what Redditors or other crypto fans tell you, there’s no such thing as a guaranteed return on any investment.
You can verify if a company files with the SEC through the EDGAR database, which lets you cross-check any information someone has given you.
If you believe someone is trying to scam you, you can file a complaint with FINRA.
Earlier this week, the U.S. Securities and Exchange Commission halted trading in several securities, including The Crypto Company, due to concerns about the accuracy of claims “regarding compensation for promoting the firm and plans for insider sales,” according to CNN Money.
The warning couldn’t have come at a more critical time: Just as headlines flooded in about the skyrocketing prices of cryptocurrencies in recent months, nearly every major digital currency (with the exception of Ethereum Classic) dropped on Friday morning. Coinbase, a bitcoin exchange platform, temporarily halted buying and selling that day due to the “price rout.” Bitcoin’s value plummeted from nearly $20,000 per coin to just over $15,000 by Thursday’s close.
