The agency’s alert comes after the 13-count indictment of two men for allegedly operating a scam bitcoin (BTC) investment scheme which promised zero-risk returns as high as 50%.
The United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have both issued an alert warning against fraudulent websites claiming to operate an advisory and trading business.
These warnings were issued on April 24 by the SEC’s Office of Investor Education and Advocacy and the CFTC’s Office of Customer Education and Outreach, was published on April 24.
The warning reveals that staff from both agencies have recently observed crypto-related investment scams.
In these cases, fraudsters pose as “digital asset or cryptocurrency advisory and trading businesses.” In other situations, they claim they can invest clients’ funds in special crypto trading systems or mining farms. These fraudsters often claim their schemes can guarantee lucrative returns of about 20% to 50%, with little or no risks.
In an attempt to protect investors, both agencies have summarized six red flags that often characterize fraudulent operations. They also urged investors to closely scrutinize crypto-related investment offers.
Firstly, guaranteed returns and risk-free investment represents one such suspicious characteristic.
Also, the text notes that scams may use entails complex jargon and opaque or confusing language to disorient investors and conceal inconsistencies.
The agencies also urged investors to consult scheme operators’ license and registration status on the Investor.gov site. They warned against participating in an investment scheme that is unregistered or unlicensed.
Another warning sign is an investment scheme promoted through an unsolicited sales pitch from an anonymous seller. The agencies added that fraudsters often use fake names, misleading photos, and may provide U.S. contact numbers despite operating from overseas.
Finally, the alert usually has both a “too good to be true” appearance and creates “pressure to buy right now”. Thus, it can be a hint that the investment scheme is dubious.
One of many recent crimes
According to reports, the agencies joint alert comes after a 13-count indictment of two men. They were accused of operating a scam Bitcoin (BTC) investment scheme which promised zero-risk returns for as high as 50%.