Adding to the list of alphabet soup agencies nudging into the cryptocurrency arena, the Federal Trade Commission (FTC) plans to host an informational workshop devoted to examining cryptocurrency scams. The workshop is scheduled to take place in Chicago on June 25, and will also be broadcast live on the internet. The FTC workshop is entitled “Decrypting Cryptocurrency Scams,” and will feature law enforcement officials, consumer groups, and researchers who will discuss how scammers are targeting investors and how investors can protect themselves.
As cryptocurrencies have become more popular over the past year, they have attracted the attention not just of investors but also of scam artists and, therefore, regulators and law enforcement. Particularly with the rising attraction of initial coin offerings (ICOs), many investors have been fleeced of millions of dollars of their funds. While there are certainly some key steps to take in order to do your due diligence and ensure that you don’t fall victim to a scam, federal regulators apparently don’t believe that investors are able to educate themselves, hence their push to inform investors about cryptocurrency scams.
The primary rule of thumb when thinking about cryptocurrency investments is the same as with any other investment: if it sounds too good to be true, it probably is. If someone is advertising CDs that offer 10% per year returns guaranteed, it’s probably a Ponzi scheme. If someone is touting a penny stock that is guaranteed to rise to over a dollar, it’s probably a pump-and-dump scheme. And if someone hawks an ICO that doesn’t offer anything groundbreaking and is created by an anonymous team of people, it’s probably also a scam.
It’s too easy to look back at the tremendous growth in the the price of Bitcoin and other cryptocurrencies and assume that growth will continue into the future. Yes, cryptocurrencies still have a lot of growth ahead of them, but it won’t occur overnight. If someone guarantees that you’ll double your money in a year, hold on to your (crypto)wallet.
And there are so many cryptocurrencies out there now that it can be impossible to tell which ones will or won’t be around even just a year from now. Sticking to established cryptocurrencies such as Bitcoin, Litecoin, etc., and established investment methods such as Bitcoin IRAs or outright purchases featuring cold storage is still the best way to make sure that you can benefit from the rise in cryptocurrencies without falling victim to scam artists.