Beware bitcoin is big financial scam senate

Bitcoin buyer beware: US SEC warns 'extreme caution' over cryptocurrency investments

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Company Filings More Search Options. There are tales of fortunes made and dreamed to be made. The cryptocurrency and ICO markets have grown rapidly. These markets are local, national and international and include an ever-broadening range of products and participants.

They also present investors and other market participants with many questions, some new and some old but in a new formincluding, to list just a few:. The answers to beware bitcoin is big financial scam senate and other important questions often require an in-depth analysis, and the answers will differ depending on many factors.

This statement provides my general views on the cryptocurrency and ICO markets [1] and is directed principally to two groups:. A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.

Investors should understand that to date no initial coin offerings have been registered with the Beware bitcoin is big financial scam senate. The SEC also has not beware bitcoin is big financial scam senate date approved for listing and trading any exchange-traded products such as ETFs holding cryptocurrencies or other assets related to cryptocurrencies. We have issued investor alerts, bulletins and statements on initial coin offerings and cryptocurrency-related investments, including with respect to the marketing of certain offerings and investments by celebrities and others.

If you choose to invest in these products, please beware bitcoin is big financial scam senate questions and demand clear answers. A list of sample questions that may be helpful beware bitcoin is big financial scam senate attached.

As with any other type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, beware bitcoin is big financial scam senate if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost.

Please also recognize that these markets span beware bitcoin is big financial scam senate borders and that significant trading may occur on systems and platforms outside the United States. Your invested funds may quickly travel overseas without your knowledge. As a result, risks can be amplified, including the risk that market regulators, such as the SEC, may not be able to effectively pursue bad actors or recover funds.

I believe that initial coin offerings — whether they represent offerings of securities or not — can be effective ways for entrepreneurs and others to raise funding, including for innovative projects. However, any such activity that involves an offering of securities must be accompanied by the important disclosures, processes and other investor protections that our securities laws require.

A change in the structure of a securities offering does not change the fundamental point that when a security is being offered, our securities laws must be followed. Specifically, we concluded that the token offering represented an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.

Following the issuance of the 21 a Report, certain market professionals have attempted to highlight utility characteristics of their proposed initial coin offerings in an effort to claim that their proposed tokens or coins are not securities. Many of these assertions appear to elevate form over substance. Tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others continue to contain the hallmarks of a security under U.

On this and other points where the application of expertise and judgment is expected, I believe that gatekeepers and others, including securities lawyers, accountants and consultants, need to focus on their responsibilities.

Beware bitcoin is big financial scam senate urge you to be guided by the principal motivation for our registration, offering process and disclosure requirements: I also caution market participants against promoting or touting the offer and sale of coins without first determining whether the securities laws apply to those actions.

Similarly, I also caution those who operate systems and platforms that effect or facilitate transactions in these products that they may be operating unregistered exchanges or broker-dealers that are in violation of the Securities Exchange Act of On cryptocurrencies, I want to emphasize two points. Before launching a cryptocurrency or a product with its value tied to one or more cryptocurrencies, its promoters must either 1 be able to demonstrate that the currency or product is not a security or 2 comply with applicable registration and other requirements under our securities laws.

Second, brokers, dealers and other market participants that allow for payments in cryptocurrencies, allow customers to purchase cryptocurrencies on margin, or otherwise use cryptocurrencies to facilitate securities transactions should exercise particular caution, including ensuring that their cryptocurrency activities are not undermining their anti-money laundering and know-your-customer obligations.

Speaking broadly, cryptocurrencies purport to be items of inherent value similar, for instance, to cash or gold that are designed to enable purchases, sales and other financial transactions. They are intended to provide many of the same functions as long-established currencies such as the U. Although the design and maintenance of cryptocurrencies differ, proponents of cryptocurrencies highlight various potential benefits and features of them, including 1 the ability to make transfers without an intermediary and without geographic limitation, 2 finality of settlement, 3 lower transaction costs compared to other forms of payment and 4 the ability to publicly verify beware bitcoin is big financial scam senate.

Other often-touted features of cryptocurrencies include personal anonymity and the absence of government regulation or oversight. Critics of cryptocurrencies note that these features may facilitate illicit trading and financial transactions, and that some of the purported beneficial features may not prove to be available in practice. Whether that assertion proves correct with respect to any digital asset beware bitcoin is big financial scam senate is labeled as a cryptocurrency will depend on the characteristics and use of that particular asset.

In any event, it is clear that, just as the SEC has a sharp focus on how U. This extends, for example, to securities firms and other market participants that allow payments to be made in cryptocurrencies, set up structures to invest in or hold cryptocurrencies, or extend credit to customers to purchase or hold cryptocurrencies.

Coinciding with the substantial growth in cryptocurrencies, companies and individuals increasingly have been using initial coin offerings to raise capital for their businesses and projects.

Typically these offerings involve the opportunity for individual investors to exchange currency such as U. These offerings can take many different forms, and the rights and interests a coin is purported to provide the holder can vary widely. A key question for all ICO market participants: In contrast, many token offerings appear to have gone beyond this construct and are more analogous to interests in a yet-to-be-built publishing house with the authors, books and distribution networks all to come.

It is especially troubling when the promoters of these offerings emphasize the secondary market trading potential of these tokens. Prospective purchasers are being sold on the potential for tokens to increase in value — with the ability to lock in those increases by reselling the tokens on a secondary market — or to otherwise profit from the tokens based on the efforts of others. These are key hallmarks of a security and a beware bitcoin is big financial scam senate offering.

By and large, the structures of initial coin offerings that I have seen promoted involve the offer and sale of securities and directly implicate the securities registration requirements and other investor protection provisions of our federal securities laws.

Generally speaking, these laws provide that investors deserve to know what they are investing in and the relevant risks involved. We at the SEC are committed to promoting capital formation. The technology on which cryptocurrencies and ICOs are based may prove to be disruptive, transformative and efficiency enhancing.

I am confident that developments in fintech will beware bitcoin is big financial scam senate facilitate capital formation and provide promising investment opportunities for institutional and Main Street investors alike. I encourage Main Street investors to be open to these opportunities, but to ask good questions, demand clear answers and apply good common sense when doing so.

When advising clients, designing products and engaging in transactions, market participants and their advisers should thoughtfully consider our laws, regulations and guidance, as well as our principles-based securities law framework, which has served us well in the face of new developments for more than 80 years.

I also encourage market participants and their advisers to engage with the SEC staff to aid in their analysis under the securities laws. Staff providing assistance on these matters remain available at FinTech sec. This statement is not, and should not be taken as, a definitive discussion of applicable law, all the relevant risks with respect to these products, or a statement of my position on any particular product.

Additionally, this statement is not a comment on any particular submission, in the form of a proposed rule change or otherwise, pending before the Commission. Fraud and manipulation involving bitcoin traded in interstate commerce are appropriately within the purview of the CFTC, as is the regulation of commodity futures tied directly to bitcoin.

That said, products linked to the value of underlying digital assets, including bitcoin and other cryptocurrencies, may be structured as securities products subject to registration under the Securities Act of or the Investment Company Act of Initial Coin Offerings July 25,available at https: For example, just as with a Regulation D exempt offering to raise capital for the manufacturing of a physical product, an initial coin offering that is a security can be structured so that it qualifies for an applicable exemption from the registration requirements.

The DAO July 25,available at https: Beware bitcoin is big financial scam senate also see the SEC investor bulletins, alerts and statements referenced in note 3 of this statement.

Securities and Exchange Commission. They also present investors and other market participants with many questions, some new and some old but in a new formincluding, to list just a few: Is the product legal? Is it subject to regulation, including rules designed to protect investors?

Does the product comply with those rules? Is the offering legal? Are those offering the product licensed to do so? Are the trading markets fair? Can prices on those markets be manipulated? Can I sell when I want to? Are there substantial risks of theft or loss, including from hacking? This statement provides my general views on the cryptocurrency and ICO markets [1] and is directed principally to two groups: Considerations for Main Street Investors A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.

Considerations for Market Professionals I believe that initial coin offerings — whether they represent offerings of securities or not — can be effective ways for entrepreneurs and others to raise funding, including for innovative projects.

Conclusion We at the SEC are committed to promoting capital formation. Who is issuing and sponsoring the product, what are their backgrounds, and have they provided a full and complete description of the product?

Do they have a clear written business plan that I understand? Who is promoting or marketing the product, what are their backgrounds, and are they licensed beware bitcoin is big financial scam senate sell the product? Have they been paid to promote the product? Where is the enterprise located? What specific rights come with my investment? Are there financial statements? If so, are they audited, and by whom?

Is there trading data? If so, is there some way to verify it? How, when, and at what cost can I sell my investment? For example, do I have a right to give the token or coin back to the company or to receive a refund?

Can I resell the coin or token, and if so, are beware bitcoin is big financial scam senate any limitations on my ability to resell?

If a digital wallet is involved, what happens if I lose the key? Will I still have access to my investment? If a blockchain is used, is the blockchain open and public? Has the code been published, and has there been an independent cybersecurity audit? Has the offering been structured to comply with the securities laws and, if not, what implications will that have for the stability of the enterprise and the value of my investment?

What legal protections may or may not be available in the event of fraud, a hack, malware, beware bitcoin is big financial scam senate a downturn in business prospects? Who will be responsible for refunding my investment if something goes wrong?

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A romance scam is a confidence trick involving feigned romantic intentions towards a victim, gaining their affection, and then using that goodwill to commit fraud.

Fraudulent acts may involve access to the victims' money , bank accounts , credit cards , passports , e-mail accounts, or national identification numbers or by getting the victims to commit financial fraud on their behalf. Scammers post profiles, using stolen photographs of attractive people, asking for others to contact them. This is often known as catfishing.

This might be for requests for gas money or bus and airplane tickets to travel to visit the victim, medical expenses, education expenses etc. There is usually the promise that the fictitious character will one day join the victim in the victim's country. The scam usually ends when the victim realizes they are being scammed or stops sending money. Victims can be highly traumatized by this and are often very embarrassed and ashamed when they learn they have become a victim of a scam and that the romance was a farce.

In some cases, online dating services are themselves engaged in misrepresentation , displaying profiles which have been fabricated, which use personal information from users who have not agreed to be depicted on the site [18] or by presenting outdated or out-of-region profiles as current and local. Scammers post profiles on dating websites , [19] social accounts, classified sites and even forums to groom new victims.

Upon finding victims, scammers lure them to more private means of communication, such as providing an e-mail address to allow for fraud to occur. Some romance scammers seek out a niche of various fetishes where they will find an obscure fetish and they will make the victim think that if they pay for the scammer's plane ticket, they will get to live out a sexual fantasy of theirs by having the scammer come to them to have sex.

The scammers also like to entice victims to perform sexual acts on webcam. They then record their victims, play back the recorded images or videos to them and then extort money to prevent them from sending the recordings to friends, family, employers, often discovered via social media sites such as Facebook , Twitter etc. The pro-dater differs from the other scams in method of operation; a face-to-face meeting actually does take place in the scammer's country but is devoted solely into manipulating the victim into spending as much money as possible in relatively little time, with little or nothing in return.

The scheme usually involves accomplices, such as an interpreter and a taxi driver, all of which must be paid by the victim at an inflated price. The vendors are typically part of the scheme. The victim leaves just as alone but poorer at the end of the trip. The merchandise is returned to the vendors, the pro-dater and the various accomplices take in their respective cut of the take.

As the pro-dater is eager to date again, the next date is immediately set up with the next wealthy foreigner. The supposed relationship goes no further, except to inundate the victim with requests for more money after they return home.

Another variation is that the scammer insists they need to marry in order to inherit millions of dollars of gold left by a father, uncle, or grandfather. The young woman will contact a victim and tell them of their plight of not being able to remove the gold from their country due to being unable to pay the duty or marriage taxes. The woman will be unable to inherit the fortune until she gets married, the marriage being a prequiste of the father, uncle or grandfather's will.

The scammer keeps the victim believing that they are sincere, until they are able to build up enough rapport to ask for thousands of dollars to help bring the gold into the victim's country. The scammer will offer to fly to the victim's country to prove that they are a real person.

The victim will send money for the flight. However, when the victim goes to meet the scammer they never show up. The victim contacts the scammer to ask what happened. The scammer will provide an excuse such as not being able to get an exit visa, or illness of themselves or a family member. Scammers are very adept at knowing how to "play" their victims - sending love poems, sex games in emails, building up a "loving relationship" with many promises of "one day we will be married". Often photos of unknown African actresses will be used to lure the victim into believing they are talking to that person.

Victims may be invited to travel to the scammer's country; in some cases the victims arrive with asked-for gift money for family members or bribes for corrupt officials, and then they are beaten and robbed or murdered. A rapidly growing technique scammers are using is to impersonate American military personnel.

Scammers prefer to use the images, names and profiles of soldiers as this usually inspires confidence, trust and admiration in their female victims. They tell their victims that they are lonely, supporting an orphanage with their own money, needing financial assistance because they can't access their own money in a combat zone, etc. The money is always sent to a third party to be collected for the scammer.

Sometimes the third party is real, sometimes fictitious. Funds sent by Western Union and MoneyGram do not have to be claimed by anyone showing identification if the sender sends money using a secret pass phrase and response, and can be picked up anywhere in the world. Some scammers may also use Bitcoin as an alternative payment method. Sensitive people are more vulnerable to online dating scams, based on a study conducted by the British Psychological Society.

Per their results, sensitive and less emotionally intelligent people are more likely to be vulnerable to online dating scams. The scammer first grooms a victim by expressing love for them before outlining their desperate circumstances. They then attempt to request money from the victim. Our study focused on why some individuals are more likely to become the victims of these scams than others.

The site provides info about current scams, warning signs and staying safe. Many romance scams, money payment, Nigerian advance fee scam, blackmail and extortionist scam occur in the West African, Russian, Ukrainian, American and Trinidad and Tobago sites that rip off vulnerable westerners as of to according to Ukrainian authorities and the FBI. From Wikipedia, the free encyclopedia. Criminal justice portal Sociology portal. Archived from the original on Beware of Online Dating Scams".

Archived from the original on 8 December Retrieved 20 February Moscow Russia Insider's guide. The Sydney Morning Herald. Retrieved 6 December Retrieved July 11, The New York Times. Happy Mutants , LLC. Retrieved September 10, Benefit Electoral Medicare Visa Welfare. Scams and confidence tricks. Confidence trick Error account Shill Shyster Sucker list. Con artists Confidence tricks Criminal enterprises, gangs and syndicates Email scams Impostors In the media Film and television Literature Ponzi schemes.

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