Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich December 22, 2017
FINRA alerts Bitcoin Scam, Initial Coin Offering Scam ICO, and Cryptocurrency Scams

Not-for-profit FINRA (Financial Industry Regulatory Authority) issued a warning titled “Dont Fall for Cryptocurrency-Related Stock Scams” alerting investros of Bitcoin and ICO frauds.

FINRA is not part of any federal government agency. Instead the non-profit organization is authorized by Congress as self-regulatory organization (SRO) to regulate the broker-dealer industry. In their investor alert they warn against purchasing shares of companies speculating high returns of cryptocurrency such as bitcoin but lack the business fundamentals and financial reporting. They point to the SEC’s involvement in suspending securities trading of bitcoin products after the companies in question could not offer transparency into their claims relating to ICO and crytocurrency.

FINRA reminds investors that in any “hot” market hyperbole claims by fraudsters exploit the good intentions of legitimate companies in the market.

“Do your research before purchasing shares of any company offering investment opportunities in cryptocurrency. And don’t be fooled by unrealistic predictions of returns and claims made through press releases, spam email, telemarketing calls or posted online or in social media threads. These actions may be signs of a classic “pump and dump” fraud.”

The list of tips to avoid scams includes stock “ppump-and-dump” schemes on over-the-counter (OTC) markets. Their full announcement, found here, follows an August alert about Initial Coin Offerings, and a May alert about “what Bitcoin is.” Full announcements linked on the titles below:

Bitcoin: More than a Bit Risky

“Bitcoin and other digital currencies continue to garner attention in media reports and elsewhere. Government hearings have been held on virtual currencies, and media reports have focused not only on virtual currency’s potential promise, but also on very real abuses and criminal activity associated with it. “

Initial Coin Offerings (ICO): Know Before You Invest

“Investing in an ICO may seem like an exciting way to be a part of the virtual currency and blockchain startup markets, but use caution when you consider these investments. New technologies and topics that are the subject of media buzz are often used by fraudsters as an opportunity to dupe investors.

To stay on guard and avoid becoming drawn into a scam, look for the warning signs of investment fraud. “

Indeed, the non-profit has been just as involved in the virtual currency space as any other government agency. They operate by gathering and scrutinizing data from broker dealer firms and ensuring they comply with rules of ethics. They boast the enforcement of rules governing 3,700 broker-dealers with 634,000 brokers and that in 2016 1,434 disciplinary actions were brought against registered brokers and firms. To find out more about FINRA and their involvement in the financial markets please click here.