Do You Know The Risks Of Cryptocurrency ICO?
The SEC has begun to warn people that are looking into cryptocurrency and blockchain to be weary of frauds. The US Securities and Exchange Commission has given their warning, which comes after a string of public companies began touting information related to blockchain. Virtual coins and tokens have generated a way to share them by using blockchain’s ledger technology. These can then be sold as initial coin offerings or “ICO’s”.
More and more people and businesses are using initial coin offerings – also known as coin and token launches – to raise money in the market. Right now the SEC has made sure to come out and say that even though this is a fair and lawful investment opportunity, “there may be situations in which companies are publicly announcing ICO or coin/token related events to affect the price of the company’s common stock.”
The Securities and Exchange Commission said that these fraudsters will often use the “hot ticket” of the time – first it was ebola cures, zika cures, marijuana stocks, etc – and convince potential investors to buy into their money scheme.
There was a recent sew of trading suspensions issued by the organization for companies who opening touted news that was related to cryptocurrency. “A trading suspension is one warning sign of possible microcap fraud (microcap stocks, some of which are penny stocks and/or nanocap stocks, tend to be low priced and trade in low volumes). If current, reliable information about a company and its stock is not available, investors should consider seriously the risk of making an investment in the company’s stock,” the SEC said.
Basically, just as with any investment, investors need to do their research before backing new investments with their hard-earned money.