Don’t let your clients be allured by cutting edge technology innovations involving money- it could come at a high cost.
The increasing use of virtual currencies is becoming a cause for concern as fraudsters have been known to use them in perpetrating investment schemes. Bitcoin is one example of a decentralized peer-to-peer payment system in which users can exchange money—either for traditional currencies (like the U.S. dollar) or to purchase items and services online—without using a bank or middle man.
Sounds great, right? Well, maybe not when virtual currencies are said to have greater privacy benefits and less regulatory oversight; so investors could be in for more than they thought.
Earlier last month the U.S. Securities and Exchange Commission issued an Investor Alert on virtual currency. The alert urges investors to be wary of Bitcoin-related opportunities:
- There is no such thing as a “guaranteed” high investment return. Investors shouldn’t be enticed by anyone that promises a high rate of return with little or no risk, and should take caution with unsolicited offers as they could be a part of a fraudulent investment scheme.
- Investors should be suspicious of investment opportunities that don’t ask about their net worth or income, and should only deal with licensed sellers. Many fraudulent deals involve unlicensed individuals or unregistered firms.
- If there’s a pressure to buy right away, it could be a fraudster creating a false sense of urgency to get in on the investment.
So if you find your clients inquiring about Bitcoin, point them to the SEC’s Investor Alert on Investor.gov to learn more about avoiding investment fraud.
Since joining Advent earlier this year, Kendall has leveraged her passion for writing along with her background working with enterprise cloud technologies to strengthen Advent’s external communications.