BaFin Warns Investors of Crypto Trading Advices on Social Media

The Federal Financial Supervisory Authority in Germany (BaFin) issued a warning on crypto trading advice on social media. Although there was no direct reference to social media channels, Telegram is one of these sources.

BaFin did provide its principals for any investor that wishes to use social media for investment tips.

BaFin's Advice on Social Media Tips

The number of followers, likes or positive feedback are not valid indicators. They do not reflect the performance of the investment tips. It is very easy to manipulate results in social media. Positive feedback or references related to investment success stories can be fictionized and produced at the author's request.

Investment tips are often marketed aggressively on social media. The goal is to make investors have 'fear of missing out' (FOMO) and push them into making poor decisions. Always check the investment advice to ensure the risks and opportunities are fully understood.

Investment advice on social networks is mostly free. This means that the author is compensated through other sources. Most of the time they earn a commission from the broker that its products are advertised on social media. For regular users, it is difficult to detect. Bear in mind that with such commission models there can be an ulterior motive for the individual providing the advice.

There is no 'fast money' that is '100% safe.' If you are promised high profits rest assured that the risk is extremely high. The financial products that may offer such returns are highly speculative on most occasions. This can result in significant loss including losing the entirety of invested capital.

Caution is advised if only success stories are highlighted without the risk involved.

'Pump and Dump'

There are dedicated Telegram groups that 'pump and dump' cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term. These groups coordinate their trades, targeting low-volume cryptocurrencies. When the price jumps higher, investors that are unaware of the scheme buy the cryptocurrency. The groups' members then sell their cryptos for a hefty profit.

The Australian Securities and Investments Commission (ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term) has been cracking down on these groups.