FBI Wants Crypto Investors to Perform Proper Due Diligence

The agency suggested the investors to “invest what they can afford to lose.”

The Federal Bureau of Investigation (FBI), in a recent interview, outlined its views on fraudulent cryptocurrency schemes and initial coin offerings (ICOs).

Talking to Dutch financial news portal the Paypers, a representative from the bureau revealed that though the types of cryptocurrency scams can be spread across a wide spectrum, most of the common ICOs scams misrepresents the principals’ experience, industry’s interest in the ICO, and also the coin’s probable rate of return.

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“Like any investment product, rates of return can never be guaranteed and if it sounds too good to be true, it probably is,” the FBI representative told the Paypers.

The US agency also asked investors to do proper due diligence before any investment. According to the representative, an investor should check background and registration of the individual recommending a token investment on the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck system.

“Potential investors in an ICO should perform due diligence on the principals of the entity as well as the individual offering the security, and the investor should confirm where the entity is physically located and which laws and regulations will, therefore, apply to that entity,” the FBI stated.

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Moreover, given the high market risk of digital asset companies, the bureau suggested that investors should only invest what they can afford to lose even in the token sale of reputed firms.

“The market has shown that even investments in widely recognized virtual currencies have been volatile. An investor should be cognizant that an investment in virtual currency brings substantial risk, and they should only invest what they can afford to lose.”

The FBI also echoed the Securities and Exchange Commission’s (SEC) stance on the ICOs and believes that a large number of tokens should be classified as securities.

The agency also revealed that it is working hand in hand with the two US market regulators – the SEC and the Commodity Futures Trading Commission (CFTC) – to bust financial frauds involving cryptocurrencies.

Rising Criminal Activities

Along with financial frauds via token offerings, criminal activities using digital coins are also on the rise. Last year in June, the federal agency revealed that it is dealing with 130 crypto-related cases mostly concerned with illegal substance sale on the dark web.

“The FBI has many employees versed in virtual currency and securities as well as multiple initiatives aimed at tracking and extinguishing virtual currency based schemes and the individuals that perpetrate them,” the FBI representative stated.

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