Skip to main content

https://www.coindesk.com/finra-beware-public-stocks-tout-cryptocurrency-connection/

The Financial Industry Regulatory Authority (FINRA), a self-regulatory organization (SRO) in the U.S., has issued a new warning about cryptocurrency-related stock fraud.
In a new post on its website, FINRA urged investors to do their homework when it comes to public companies that tout their activities involving blockchain or cryptocurrencies.
FINRA, an organization which provides testing and licensing for registered brokers and financial professionals, said that would-be investors should be "cautious" when assessing solicitations from such firms that seek to fund cryptocurrency initiatives "without the business fundamentals and transparent financial reporting to back up such claims."
The organization wrote:
"Especially in today’s 'hot' cryptocurrency environment, it’s easy for companies or their promoters to make glorified claims about new products, services and other cryptocurrency-related connections. And, even when legitimate companies flock to a hot, new sector, fraudsters almost always follow suit, exploiting the news to launch their latest frauds du jour."
The warning is perhaps a timely one, given several recent moves by the U.S. Securities and Exchange Commission to halt trading of several publicly traded stocks, as well as a swath of announcements by previously uninvolved companies that are now working on blockchain projects.
Among the latter group is Long Island Iced Tea Corp., which announced today that it was changing its name to Long Blockchain Corp after "shifting its primary corporate focus towards the exploration of [and] investment in opportunities that leverage the benefits of blockchain technology." As reported by Bloomberg, the stock price for Long Island soared by more than 200 percent in the wake of its announcement.
In August, the SEC warned investors about the risk of public stock pump-and-dump schemes that use cryptocurrency as a marketing tool.
"These frauds include 'pump-and-dump' and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies," the agency said at the time.
FINRA image via Shutterstock
The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Comments

Post a Comment

Popular posts from this blog

GTBANK Reportedly Experimenting With Crypto In Nigeria

One of Nigeria's biggest banks, the GTBank has reportedly expanded into  experimentation with cryptocurrencies. Users of the 737 mobile service may have seen GT coins being credited when transactions are made. The 737 service is already one of the most extensive  mobile banking solutions effective in the country, as GT Bank aims to add another layer of  functionality to their payment gateway. The GTBank has already participated in a number of crypto technology conferences being part of the CBN group. Currently, the coins are being distributed when users make transactions using the 737 mobile service. It is predicted the coins being tested may allow the bank to develop the technology further to facilitate business transactions too rather than focusing on personal use. This comes as the GTBank have also delved into blockchain and crypto technology previously. Used as a basis for their GT Tokens, the technology was used essentially as a form of identity verification. Release
Post a Comment
Read more

Know Why the Founder of Litecoin Charlie Lee Sold and Donated All His Coins

Litecoin  is a crytocurrency and an open source software project founded by Charlie Lee in October 2011. Although a fork of Bitcon Core, Litecoin is different from  Bitcoin  in various ways. It has a faster processing speed but is slightly more expensive. Charlie Lee, a former Google employee, is a computer science engineer from MIT. He worked with Coinbase after Google before creating his own cryptocurrency. Charlie Lee has always been in the news, but this time it is because he “sold and donated” all his litecoins. Although the exact amount is not disclosed, it is reportedly donated mainly to the LTC Foundation which will likely help in the growth of Litecoin. People have reacted to this news in quite different ways, with some appreciating the move while others speculating why he did it. Charlie Lee tweeted that he is glad about the fact that people are not overreacting. Lee seemingly set aside some doubts by tweeting that one cannot compare him to a CEO who sold all his s
Post a Comment
Read more

Get ready for a 2018 cryptocurrency crime wave

With bitcoin recently pushing past the $19,000 level ( despite crashing hard on Friday)  and a slew of other cryptocurrencies like ethereum, litecoin and Ripple making rapid price gains in its wake, it’s never been a more bullish time for digital currency investors. But there is always a price to be paid for such success and in this case cryptocurrency’s massive surge in popularity is likely to trigger an epic wave of crime.   Already on December 4th, the  SEC announced  it shut down an initial coin offering (ICO) for allegedly defrauding investors of $15 million. However, while fraud is an inherent risk of cryptocurrency, as wallets, exchanges and ICOs all take place with little to no legal or regulatory oversight, it is hacking which presents a far more serious threat for investors because it is so widespread and so difficult for the average person to avoid.   Hacking has been a recurring problem for this industry from the very beginning. In fact, a report last year from the US
Post a Comment
Read more