As is commonly the case with any new technology, the SEC is warning potential investors that fraudsters have used the excitement surrounding the new tech of Bitcoin to entice investors. The fact remains that many potential investors still don’t exactly understand what Bitcoin is, and even casual observers know it’s a volatile market. Both facts mean that it is harder for investors to research a seller’s representations—even when dealing with a legitimate dealer. And that means they’re much more susceptible to fraudulent claims.
Given the lore of Bitcoin as a secure, anonymous, semi-secret method of exchange, fraudsters can also use that to their advantage—convincing investors that their Bitcoin holdings can’t be tracked or otherwise externally validated, and that is a good thing.
The fraudsters may also promise investors that Bitcoin is a way to get a high-return investment hidden from the Internal Revenue Service. This could further dissuade them from doing meaningful investigation of the fraudsters’ claims. And if investors hoped to evade taxes by investing in the Bitcoin scheme, they may be less likely to report the fraud to the authorities—since they’d be admitting to their illegalities when they did so.
Accordingly, those working in crypto sales should be on the lookout for any suggestions that their firm is defrauding investors. Signs of concern include:
- High-pressure sales tactics
- Promising investors a “once-in-a-lifetime” opportunity and “guaranteed” returns
- Sales by unlicensed/unregistered sellers
- Fake testimonials in marketing materials
- Reports of skyrocketing account values
If your firm is engaging in any of these, or you know of any other efforts to mislead or deceive investors, consider becoming an SEC whistleblower. The SEC is increasing its efforts in crypto sales, and if you bring them a tip that leads to a successful enforcement action, you may be eligible for an award.
We have years of experience representing SEC whistleblowers, coupled with an SEC Enforcement lawyer on our team and an in-depth understanding of how the SEC Whistleblower Program operates. We are here to assist whistleblowers attempt to maximize their opportunity to receive a financial bounty. For a free, confidential consultation, email us or call us today at (800) 975-4345.