In an interview with Netherlands-based news site, the Paypers last week, The United States Federal Bureau of Investigation (FBI) has pointed out the consistent characteristics of a scam initial coin offering (ICO) scheme.
The main strategies of these scams, FBI stated, are mostly misrepresentations regarding the directors’ experience, industry’s traction performance of the ICO and impractical guarantees about the rate of return tokens.
To distinguish between legal ICOs and scams, investors are advised to lookup carefully at the ICO’s entities and the directors’ profiles. Physical address and contact should be placed on the reliable sources which are hard or impossible to be hacked.
By using the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck system, people can verify the identities and registration status of entities. The FBI advised investors should only invest what they can afford to lose due to substantial crypto investment risk.
Legitimate business is only counted as legal when operators of such activities are subject to registration requirements, according to The Financial Crimes Enforcement Network and multiple Federal District Courts. Register failure means violating the money transmitting laws.
The FBI also advised investors to be aware of high risks of fraud in 2019 due to new increasing token offerings. “The more tokens there are, the more risk there is for fraud in the market”, the Bureau added.