Warning for Potential Crypto Investors
“If you are considering a crypto asset-related investment, take the time to understand how the investment works and look for warning signs that it may be a crypto asset investment scam. Carefully review all materials, ask questions, and watch for the signs of a fraudulent trading website. Check out the background (including license and registration status) of anyone offering you an investment in securities using the search tools on Investor.gov and BrokerCheck. Use NFA’s BASIC system to research the background of derivatives industry firms and professionals. Learn more about investments involving crypto assets on Investor.gov or CFTC.gov. https://www.nasaa.org/69756/nasaa-investor-bulletin-world-investor-week-2023/?qoid=current-headlines
DFI’s Center for Fintech Information Fintech Guide for Consumers and Investors https://dfi.wa.gov/consumers/virtual-currency is a great place to start educating yourself about crypto.
Verify crypto businesses licensed to do business in Washington at https://dfi.wa.gov/sites/default/files/documents/virtual-currency-licensee-list.pdf
If you have been scammed in a crypto scheme, call the Washington State Department of Financial Institutions at 877-RING-DFI (746-4334) or file a complaint at www.dfi.wa.gov/file-complaint.
Visit https://dfi.wa.gov/news/alerts to learn more about the types of potentially fraudulent activity Washington’s financial services regulator is seeing in our state.
Do your homework to make sure you aren’t getting sold something that doesn’t exist.
I have a rule when it comes to investing in my future: “If you don’t understand it or can’t verify it - don’t buy it or invest in it.”
The top topic on the Department of Financial Institutions (DFI) Consumer Alerts page is cryptocurrency companies and platforms appearing to engage in fraud.
If a person were to do just a little bit of research — for example, reading DFI’s Center For Fintech Information Fintech Guide for Consumers and Investors (available in nine additional languages, by the way) — a person would know they could verify a crypto business licensed to do business in Washington State. If the business isn’t listed there, you may not want to do business with them.
Even if the crypto company is licensed to do business in Washington, you should do your homework before buying or investing. Why? All investing carries risk. Cryptocurrency is a volatile market. Never invest more than you can afford to lose.
The North American Securities Administrators Association (NASAA), warns: “Investors who deposit funds or crypto assets with a crypto asset entity might cease to have legal ownership of those assets and might not be able to get those assets back when they want to.”
DFI notes: “There is no guarantee by the government or financial institution that your virtual currency will be convertible to U.S. dollars.”
Yes, there are legitimate, honest cryptocurrency companies and platforms. You won’t know if they are, however, unless you do your homework. Verify the person and/ or company you’re working with.
Verify the product you are buying or investing in.
Don’t invest money with someone you don’t know, a stranger who approaches you in a text, on social media or via email claiming to have made big returns on a crypto investment. Don’t assume everything you see online is real.
One consumer complaint recieved by DFI reveals how after investing a lot of money and seeing what they thought were huge returns, when the person wanted to pull out the profits they were told they could not get the apparent returns - or their initial investment - from their account without first paying a significant “verification deposit” and then “taxes.” These tactics are known as “pig butchering” and “advance fee” scams. This person lost more than $1.4 million.
Do your homework. Don’t get scammed.
Volcano Guest Contributor Lyn Peters is the Director of Communications, Financial Education & Outreach with the Washington State Department of Financial Institutions. CommunicationDir@dfi.wa.gov 360-902.8731