With Cryptocurrency Fraud Exploding – Investors Should Be Wary
With cryptocurrencies like Bitcoin continuing to attract headlines, the Office of Securities Commissioner Matt Rosendale reminds Montana investors to be cautious about such investments.
Spokesman Kyle Schmauch said now that Bitcoin currencies are becoming more mainstream, prices have seen wild fluctuations.
Cryptocurrencies are a medium of exchange that are created and stored electronically in the blockchain, a distributed public database that keeps a permanent record of digital transactions. Current common cryptocurrencies include Bitcoin, Ethereum and Litecoin. Unlike traditional currency, these alternatives have no physical form and typically are not backed by tangible assets. They are not insured or controlled by a central bank or other governmental authority and are subject to little or no regulation.
“Commissioner Rosendale is advising investors to approach such investments with great caution,” Schmauch said. “If you are unfamiliar with cryptocurrencies and the technology that goes into them, it’s probably not a good idea to invest in them until you can understand what you’re getting into. Cryptocurrencies are a very exciting new technology with a lot of potential, but we are also seeing a lot of fraudulent actors trying to trick Montanans into purchasing what they really don’t understand.”
Schmauch had some red flags to watch out for.
“An unsolicited sales pitch may be part of a fraudulent investment scheme,” he said. “Cryptocurrency investment opportunities are promoted aggressively through social media. Be very wary of an unsolicited communication—meaning you didn’t ask for it and don’t know the sender—about an investment opportunity. Watch out for pressure to act fast or “get in on the ground floor” of a new tech trend.”
The CSI can help investors research the background of those selling or advising the purchase of an investment. The CSI can be reached at (406) 444-2040 or through their website at www.csimt.gov.