The U.S derivatives regulator (Commodities Future Trading Commission) issued a warning against potential investors on Thursday regarding cryptocurrency “pumps-and-dumps” scams. The main intention of such schemes is to force investors by inflating the price of digital tokens through bogus information.
Commodities Future Trading Commission to protect Investors against pump-and-dump schemes
Some of the pump and dumps spread cunning information. Generally, they deceitfully deliver about the famous high-tech business leaders who are actually not associated with it.
The statement of the Commodities Future Trading Commission noted that it has filed many complaints from the investors. As so far these investors have lost their hard-earned money in such schemes.
CFTC also warned against purchasing of cryptocurrencies based on social media tips or instant increase in price.
Erica Elliot Richardson, CFTC director of public affairs stated in the statement
“As with many online frauds, this type of scam is not new – it simply deploys an emerging technology to capitalize on public interest in digital assets.”
“Pump-and-dump schemes long pre-date the invention of virtual currencies…The CFTC encourages all customers to thoroughly research potential investments, stay informed about tactics commonly used in investment fraud, and avoid investment opportunities they don’t fully understand.”
The advice is also intended for informing investors about the risk and challenges of investing in public organizations that promote similar schemes. And also deliberately pump the prices of their offering with latest technologies.
CFTC also notified in the Customer Protection Advisory on Thursday for the people that
“beware of and avoid pump-and-dump schemes that can occur in thinly traded or new ‘alternative’ virtual currencies, digital coins or tokens.”
CFTC warns investors
- Never buy digital coins or tokens especially when it advertised on social media websites.
- Avoid the cryptocurrency related ads which promise instant money by investing in certain digital coins or tokens.
- Don’t be the part in pump-and-dump trades.
- If someone requests you there is no risk involved in the system, never trust them and don’t invest in it