The ICO market is booming and there are lots of great projects on the horizon, including the ICO picks that we publish on a weekly basis. However, it’s no secret that cryptocurrency and ICO scams are a reality, as well as projects that end up failing despite their efforts, due to poor management and other issues. In response, the US Federal Trade Commission is holding a half-day event on June 25, 2018 to expose how scammers are exploiting people, and how to identify them. Audience participants include consumer groups, law enforcement, research organizations and various companies in the private sector.
Markets generally self-police, where the best ideas will raise the most money, and people should be free to decide how to spend their own money. That said, educating people and organizations on common warning signs to look out for can have a very positive effect, and this FTC program may provide lasting benefits to future investors.
Some of the scams that are reported include deceptive investment and business opportunities, particularly in the ICO (Initial Coin Offering) space, as well as bait-and-switch schemes and deceptive mining operations. The event, held at DePaul University in Chicago, Illinois focuses on some of these issues, and can be viewed online during a live webcast.
There are plenty of legitimate bitcoin mining companies out there. However, the FTC has shut down bogus mining operations, such as Butterfly Labs when it failed to ship mining rigs on time in 2014, making them virtually useless to the people who did receive them due to algorithm complexity increases.
The FTC website has mentioned Bitcoin and Litecoin, as part of its discussion on ways to empower and protect consumers. The agency is actively engaged in work to protect consumers in every industry, including emerging fintech solutions. With so many options to store, share and spend money and digital assets, the agency sees a need for instilling a number of consumer protection principles to enable people to continue to enjoy the benefits of these financial choices. However, the FTC is not alone.
Other agencies that engage in the regulation of the digital asset industry include the CFTC, the SEC and the IRS. The challenge is in how these various agencies communicate with one another and split the jurisdiction in the most efficient, fair and transparent way. New cryptocurrency startups, as well as more seasoned companies need to know who to talk to, for guidance on abiding by current rules and regulations.
As an added bonus, the FTC workshop qualifies for 2.75 hours of continuing legal education (MCLE) for Illinois attorneys who participate. However, laypeople and those who are interested in investing into this exciting market would do well to watch the webcast. Often, getting information direct from regulators is a great way to learn about the factors affecting a particular industry. The FTC has a focus on Fintech tools that consumers may use, including mobile payments, virtual currencies and crowdfunding. Cryptocurrencies can be used in all of these ways, and there’s plenty to learn.