State regulators warned on Tuesday that fraud is widespread among cryptocurrency investment promoters.
The Texas State Securities Board warned that out of 32 cryptocurrency investment promoters investigated, at least five have failed to inform would-be investors about the risks while guaranteeing up to 40% returns per month.
Roughly two-thirds of the promoters failed to provide investors with a physical address.
The absence of a physical location may make it difficult for investors to trace a promoter to serve it with legal process or try to pursue other solutions once they have been defrauded, the Board said.
Based on reports, regulators noted how many cryptocurrency promotions made use of Bitcoin’s sharp price increase, although the investment they are marketing to investors had nothing to do with it.
The promotions also failed to inform on the possibility of hackers infiltrating security systems and interrupting an investment program or disappearing with the cryptocurrencies.
The board said investors should not be drawn into a false sense of confidence by promoters who put up charming photographs and glowing resumes on their websites.
“Charming portraits and lengthy profiles may convey a sense of comfort and security, but virtually anyone from anywhere may be lurking behind the flashy graphics,” warns the report.
Retail investors are urged not to sign up with cryptocurrency promoters as marketers with the hope of reaping finder’s fees by inviting friends and relatives to become marketers as well.
Without proper permits, the consequences can be severe for individuals who commit such frauds.