Groundbreaking technology, spectacular returns in 2017, and a lack of cryptocurrency knowledge among the general public, is presenting a once in a lifetime opportunity for con artists. They can promise anything, deliver nothing, and collect a small fortune from unsuspecting investors. Misleading people to believe they will see spectacular returns from these activities is setting off red flags with investor protection agencies.
The Financial Industry Regulatory Authority (FINRA) has taken notice of the unsubstantiated claims of ICOs and certain cryptocurrencies with the issuance of an Investor Alert on the matter. With nothing more than a whitepaper to back up the promises of some of the Initial Coin Offerings, it comes as no surprise that they would face the scrutiny of investigators. Some of these ICOs have raised over $200 million, and even though most of them fit the classification of a security, to date none of them have registered with the SEC.
"FINRA is issuing this Alert to warn investors to be cautious when considering the purchase of shares of companies that tout the potential of high returns associated with cryptocurrency-related activities without the business fundamentals and transparent financial reporting to back up such claims."
It's a shame that blockchain, in all its glory and fraud-preventing transparency, isn't able to shine a little transparency on what's going on behind the closed doors of these fraudsters. The words "business fundamentals" have never been a part of the usual cryptocurrency dialogue. If you happen to find a cryptocurrency that follows a best-practises business philosophy, and can back up their claims, you may have found your unicorn.
Read more: FINRA Investor Alert