by Emma Newbery | May 2, 2021
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High-profile cryptocurrencies attract fraudsters as well as investors.
Last week, Texas issued an emergency cease and desist order against a fraudulent cryptocurrency trading program. Both Texas-based C3 Data Services and UK-based Bitles Ltd are accused of offering fraudulent products and are no longer authorized to sell securities in the state.
According to the order, the companies used the following claims to lure investors:
The Texas State Securities Board (TSSB) says these claims are all false.
Joe Rotunda, TSSB Enforcement Director, warned the recent sharp increase in cryptocurrency prices is fertile ground for scams. “Unfortunately, promoters of illegal crypto-get-rich-quick schemes are taking advantage of these changes to the market -- leveraging widespread interest to peddle fraudulent products," he said.
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The TSSB was the first state regulator to take action against fraudulent crypto companies back in 2017, and it continues to actively prosecute this type of activity. But you can take steps to protect yourself, too.
If you are approached with an offer that seems to be fraudulent -- for example, it promises impossibly high returns on your investment -- contact the SEC or your state securities board. Hopefully, you'll be able to ensure nobody falls victim to the scheme.
Scams aside, this is a relatively new and volatile industry. That means it has a lot of potential, but also a lot of risk. The value of the cryptocurrency you invest in may soar, but it may also plummet -- and in some cases, the coin may fail entirely. That's why we recommend you don't invest money you might need in the short term.
For example, The Ascent's parent company, The Motley Fool, has invested in Bitcoin because it believes the currency has long-term value. But it's not in it for short-term gain -- if the value of Bitcoin falls tomorrow, The Motley Fool is ready to ride out the dip.
If you're looking to buy Bitcoin or another currency for the first time, do your research and take it slow. Don't rush because you're scared of missing out. If your Bitcoin gets stolen, it will be difficult or even impossible to recover, so better to tread carefully.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Emma Newbery owns Bitcoin. The Motley Fool owns shares of and recommends Bitcoin.
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