The world of cryptocurrencies is wrought by “a persistently expanding exploitation of the crypto ecosystem by fraudsters.” So much so that the North American Securities Administrators Association (NASAA) recently announced one of the largest coordinated series of enforcement actions by state and provincial securities regulators in the United States and Canada to crack down on fraudulent Initial Coin Offerings (ICOs), cryptocurrency-related investment products, and those behind them.
A critical component of “Operation Cryptosweep” is raising public awareness of the risks associated with ICOs and cryptocurrency-related investment products. “Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution,” Borg said.
To assist in this public awareness the SEC Office of Investor Education and Advocacy launched a sample ICO website. The offering is not real, it is fake. It is designed to “illustrate the common “red flags” of fraud in the ICO markets and how little work it takes to engage in such a fraud.” Investors and Advisors are encouraged to visit and view the materials here to help you tell a real investment opportunity from a scam.
You can also find a list of sample questions for investors considering a cryptocurrency or ICO investment opportunity here. Investors are advised to “demand answers to these and other questions about potential investments.” That said, you are cautioned to “remember that although the SEC and other federal, state, and provincial regulators are committed to protecting investors in these markets, there is a real risk that enforcement efforts may not make investors whole who have lost their investments to fraud.”
If you have any questions, Red Oak is here to help you.