FBI Wants Crypto Investors to Perform Proper Due Diligence

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.

“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.

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 Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term 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 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.

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.