Operation Cryptosweep helps identify crypto-investment schemes
May 23, 2018
Salem — Crypto-investment products are growing in popularity. There are more than 30,000 crypto-related domain registrations. Unfortunately, it is estimated that more than 80 percent of initial coin offerings (ICO) are scams to steal your money and identity.
Investors can be easily confused thinking an ICO is similar to an initial public offering (IPO). While they sound similar, they are very different. ICOs sell digital coins or tokens to fund a project. IPOs sell common stock and securities.
The most important difference is that IPOs are highly regulated, providing investor protections; many ICOs do not provide those protections.
To help consumers make informed decisions about crypto-investments, the Oregon Division of Financial Regulation is encouraging investors to be on the lookout for these common ICO schemes:
Fake digital wallets – A digital wallet allows someone to store, send, and receive cryptocurrencies. Scammers design fake wallets to gain access to people’s private codes and steal their cryptocurrency.
Pump-and-dumps – Groups of individuals coordinate to buy and promote a cryptocurrency on social media. They push the demand and price up, and then quickly sell it, leaving buyers with a devalued cryptocurrency.
Multi-level marketing platforms – Companies lure investors with the promise of high-interest/low-risk returns, and provide incentives to recruit additional investors. Eventually, the company shuts down the program, keeps the investments, and leaves investors with worthless digital coins.
“Approximately $400 million has been stolen from investors through ICOs, and that will continue to rise as they grow in popularity,” said Andrew Stolfi, division administrator. “Fraud runs rampant in these offerings and consumers must be extremely cautious before investing.”
The division has joined the North American Securities Administrators Association and more than 40 state and provincial securities regulators across the United States and Canada in Operation Cryptosweep. Designed to raise public awareness about the fraudulent actions of crypto-related investments, Operation Cryptosweep offers the resources below to help investors.
Review these resources before purchasing or investing in any type of cryptocurrency, especially those offered by an ICO. Consumers who have questions about these unregulated assets can call the division’s advocates at 866-814-9710 (toll-free).
About DCBS: The Department of Consumer and Business Services is Oregon's largest business regulatory and consumer protection agency. For more information, go to www.dcbs.oregon.gov.
About Oregon DFR: The Division of Financial Regulation is part of the Department of Consumer and Business Services, Oregon’s largest business regulatory and consumer protection agency. Visit www.dcbs.oregon.gov and www.dfr.oregon.gov.