United States Securities and Exchange Commission Issues
Fresh Investor Alert Against Fraudulent Digital Asset Trading Sites
By Block Society
The United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly issued an alert warning investors against fraudulent websites advertising cryptocurrency advisory and trading services. The cryptocurrency space is filled with many “coaches,” “gurus,” and mining companies that will promise returns and will rip you off. These companies are operating without the proper licenses, or experience. In the US, in order to give investment advice a company must be a Registered Investment Adviser (RIA); either registered with their state or federally via the SEC. RIAs registered only in their state are authorized to give investment advice for a fee to no more than 5 clients in any other state. SEC registered RIAs are authorized to give investment advice nationally. This involves having at least one employee/partner with a Series 65 Registered Investment Adviser License. Find out whether a company is registered and licensed you can search on investor.gov and to find out whether someone is a IAR one can search their name on https://www.adviserinfo.sec.gov.
When a company is registered and licensed it must adhere to a code of ethics, be subject to surprise audits, and maintain records of all conversations with clients. A Chief Compliance Officer must be appointed, usually an attorney, and their duty is to constantly monitor the company’s activity for any inappropriate/unethical practices that could jeopardize/mislead a client.
Anyone who is in the market for a company for trading education, or advisory services must do their due diligence to ensure their hard earned money isn’t going to a scam or unethical business that offers zero protection to their consumer.