It is rare that cryptocurrency investors and traders actually get insight into the way that law enforcement is watching and examining the cryptocurrency industry. In a recent interview with the FBI conducted by The Paypers, February 19, 2019 – the agency elaborated on how investors can protect themselves, and how it plans to prevent future fraud in the sector.
Dissecting A Scam
Even though bitcoin has existed for over a decade, the United States has yet to decide on a regulatory framework for cryptocurrencies. They are not alone, there are also plenty of other countries that are still trying to come up with the right legislation that can simultaneously protect investors and prevent fraud without stifling innovation.
One of the biggest concerns about initial coin offerings (ICOs) is that there are many digital tokens that have lost a tremendous amount of value thanks to the fact that the teams might have exaggerated partnerships or simply pulled off an exit scam. In an interview, the Federal Bureau of Investigation (FBI) has clarified its thoughts on the ICO space.
The FBI pointed out that many investors have fallen victim to cryptocurrency schemes, but urged individuals to do as much due diligence as possible with regards to cryptocurrency projects and companies.
They pointed out that their employees are well-versed in the space, and constantly attempting to identify scams. They also work closely with the Securities Exchange Commission (SEC) and the US Commodity Future Trading Commission (CFTC) to identify these scams and hold them accountable.
The FBI urged investors to look into these projects as much as possible, acknowledging that investors should understand just how volatile the cryptocurrency markets are, and can be. They also clarified that each investor should understand where an ICO is located, since local laws and regulation can help shed more light on the project and how legitimate it is. The FBI also stated that a physical location should be determined, and that they should be “leery” of ICOs that are “wholly internet based”.
The FBI acknowledged that fraud has been rampant in the cryptocurrency sector, and they cannot deny the economic impact as a result. It seemed as though the FBI seemed to suggest that providing more knowledge to investors about how to avoid these scams might prove to be a more useful tactic in order to combat cryptocurrency fraud.
Of course, the agency will continue to monitor the ICO space to ensure that there are less victims of fraud in the space. However, they stressed: “We like to say the best victim is no victim at all.”