Don't Get Conned by Crytocurrency 'Pump and Dump' Scams
can't find the Bitcoin
you purchased four years ago. Don't overcompensate by investing in shady companies suddenly deciding to "get into
"Do your research before purchasing shares of any company offering investment opportunities in
The agency went as far as to warn that companies promoting their cryptocurrency-related activities could be part of illegal "pump and dump" schemes, which is essentially what it sounds like: investors "pump up" or promote a stock that they own in order to sell it once the price goes up thanks to increased demand. In other words, think twice before investing in the Long Island Iced Tea company.
Here are FINRA's tips to avoid getting scammed:
- Ignore cold callers, especially pushy ones, trying to sell you on cryptocurrency stock, "even if the claims sound plausible, particularly if the recommended stocks are very low-priced." Just hang up, or, better yet, don't answer at all.
- Despite what Redditors and other crypto-enthusiasts would have you believe, no one can guarantee the outcome of any investment.
You can find out whether a company files with the SEC via the
, which allows you to verify information someone may have told you.
- You can file a complaint with FINRA if you think someone is trying to scam you.
The U.S. Securities and Exchange Commission suspended trading in several securities earlier this week, including The Crypto Company , because of concerns about the accuracy of information "about compensation paid to promote the firm and plans for insider sales," according to CNN Money.
The warning couldn't be more timely: Just as investors were bombarded with headlines touting the massive price increases in cryptocurrencies over the past few months, almost every major digital currency ( save Ethereum classic ) was down Friday morning. Coinbase, a bitcoin marketplace, disabled buying and selling Friday due to the "price rout." Bitcoin's price fell from a high of almost $20,000 per coin to just over $15,000 Thursday.