Monday, July 15, 2019

CFTC Releases An Official Customer Advisory Against Crypto Fraud

CFTC or the Commodity Futures Trading Commission recently released a customer advisory tackling different ways to prevent being victims in crypto frauds, scams and hacking incidents in the market.

The customer advisory is headlined with “Customer Advisory: Use Caution When Buying Digital Coins or Tokens.” In this publication, CFTC states the various things and details people should do and look for in order to seek secured online transactions with crypto. Furthermore, they informed the future investors of crypto to “exercise caution and conduct extensive research before purchasing digital coins or tokens, including those self-described as “utility coins” or “consumption coins.”

According to CFTC, the crypto market is still ‘very young’ to be understood by the experts and to be regulated perfectly by the government. Due to its premature age in the economy, there is no widely-accepted standard for the value of a specific token or crypto. With this thought, many scammers and hackers tend to use fancy words and exaggerate the value of investment in online currencies; making it pleasant in the eyes and minds of the investors.

However, the commission firmly stands that crypto and ICOs are more dangerous than people think. In the recent studies and news reports, it stated that a large number of
Initial Coin Offerings (ICOs) are fraudulent or the underlying products or services fail to live up to their promises. Estimates of fraud range from 5 percent to more than 80 percent of ICOs. One report also identified nearly 300 offers that contained plagiarized investment
documents, promises of guaranteed returns or fake executive teams, as also stated in the publication.

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Moreover, CFTC also believes that the “network effect” or the phenomenon wherein increased numbers of people or participants improve the value of a good or service make up most of the reason how scammers and frauds reached out many people looking for crypto investments. As a matter of fact, once the promoters promised a large share of future returns, the digital coins are considered to be securities or commodities and they are automatically subject to federal securities, according to US Securities and Commission. On the publication, it is also written how cryptos are very unpredictable when it comes to its standard and stance in the market which makes it difficult to configure by the larger mass.

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Although people are exclaiming the success of cryptosystem around the world, the governments of different countries are still hesitant to consider this as a great change in the market. Still, the government is reaching each person to do a thorough research before everything.

Elizabeth Jamie
Jamie Elizabeth is a Mass Communication Graduate from the Philippines, knowledgeable in the field of cryptocurrencies, blockchain etc., currently enjoying freelance writing, and able to write anything under the sun.

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