Bitcoin, Crypto currency, Blockchain

Beware Scam! CFTC warns investors to (once again) from fraud

d846edc16ad6995f5449a37b18b6ed56 - Beware Scam! CFTC warns investors to (once again) from fraud

ICOs can be a good form of investment, but also a lot of money costs if you are not careful. This Situation has been recognized, the CFTC and, therefore, published an article that explains what to look for as an Investor prior to the investment.


16. July 2018, the U.S. Commodity Futures Trading Commission (CFTC) has issued a warning for those who are interested in investing in the crypto area. It is advised to be cautious and aware of the fact that you should perform prior to the purchase of coins or Token exact searches.

“You have to understand what rights are associated with the Coins or tokens you buy. Also you have to understand what underlying factors may influence their value.“

Further from the article:

“Be especially wary of promises or guarantees on its future value.”

In addition, the CFTC has referred to as the “network effect” that can contribute, according to many of the projects to increase the value of the digital token.

Many ICOs in fraud or failure

“A lot of studies and news reports about a lot of the Initial Coin Offerings (ICOs) that these scammers are or their underlying products […] do not comply with their promises. Fraud estimates in the case of ICOs, ranging from five percent to more than 80 percent. In a report of the identified analysts almost 300 offers, plagiarized, plant, and documents, guaranteed yields, or the wrong management team. Another report shows that after one year, according to the ICO, almost half of the projects or companies either failed or still are.“

In the article, the CFTC has cited a list of factors, their points should take account of investors prior to any Investment:

  • The Potential for Forks of Open Source applications, the market is a participant, the number of Coins increase, or your Coins make it obsolete can
  • falling Mining or validation costs (should be tied to the price of these factors)
  • Acceptance of other currencies, Coins, or tokens for Goods and services offered
  • The connection between the value of the digital Coins or a token and the offered product or service
  • Acceptance of the Coins or tokens as a broad Medium of exchange or store of value
  • future competitors or technological changes that could affect the underlying business
  • future demand or usage for an application, a network, a product or a service
  • Liquidity in the market for a certain Coin or Token
  • Changes to the underlying technology that could devalue your digital Coins, or tokens
  • Risk of theft by hackers

Finally, the CFTC potential investors was another important piece of advice:

“… before you invest in an ICO, check whether the digital Coin or Token is considered to be the securities and Exchange Commission (SEC) is registered.”

Guidance in the ICO-the jungle, we also offer in our monthly crypto compass.

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