The Securities and Exchange Commission issued an “investor alert” to warn potential investors about ICO scams.
The warning, issued yesterday, notes that “fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams.”
Specific to Initial Coin Offerings, which have recently risen in popularity as a funding method for companies of multiple industries, the SEC advises investors to watch for “pump and dump” and market manipulation schemes “’involving publicly traded companies that claim to provide exposure to these new technologies.”
The SEC also noted that it would suspend trading “where the SEC is of the opinion that a suspension is required” in order to protect investors from these forms of fraud, alongside other potential responses.
ICOs have become popular amongst investors and companies for a variety of reasons, including their easy set-up—a fact that is also evidently growing more attractive to fraudsters.
Take a look at the investor alert here.