Bitcoin Fraud and How to Spot it
Anytime there is an investment mania, the fraudsters come out of the woodwork. It is easy to pull of a scam when investors want to get caught up in the investment mania. There has been nothing bigger than Bitcoin. Investors are looking to get rich quick off of the cyber currency. The Texas State Securities Board opened up 32 investigations over a four-week period starting at the end of 2017. The findings showed widespread fraud. Here are some of the findings:
No promoters were registered to sell securities in Texas, a violation of the Texas Securities Act;
note: most frauds are not registered with the State of Texas. This is always the #1 red flag.
30 promoters were broadly using websites, social media, and online advertising to market to Texans;
note: Fraudsters are breaking the law right out in the open just tempting regulators to catch them.
At least five promoters all but ignored investing risks by guaranteeing returns, some as high as 40% per month;
note: A hallmark of most frauds is high guaranteed returns.
Only 11 promoters provided potential investors with a physical address, leaving investors with little recourse if they lose their money;
note: Frauds and legitimate both will have physical addresses. The absence of one is a huge red flag.
Six of the offerings involved payment of a commission to investors who recruited new investors into the scheme.
note: Offering a commission when you or the fraudster are registered is a big violations of securities laws.
I like to publish these findings so that you can be smarter about determining what is legit and what is not legit. The bottom line is that fraud is widespread and these fraudsters act as if they don't care that they are openly breaking laws.