SEC and CFTC release a joint warning against crypto-related scams

The SEC and CFTC have decided to launch a joint effort against cryptocurrency related scams. 2017 has been the year of digital tokens and billions have been made via digital currency related activities. The new effort is being hailed by the community and everyone appreciates the SEC's and CFTC's determination to bust fraudsters.
The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) issued their latest statement regarding cryptocurrency trading. Even though most financial regulators all over the world consider virtual currencies to be highly controversial assets, this warning is the harshest one so far.

The document stated that any fraudulent activity in the offers and sales of digital instruments will not go unpunished. Both of the agencies will continue to address and monitor violations. This is not the first time the CFTC or SEC to gave warnings about the risks associated with cryptocurrency investments. Statements have been issued in the past that illustrate the volatility and uncertainty of this particular market as well.

Just before the statement was issued, the CFTC had filed charges against two fraudulent companies. Both were involved in selling crypto and offering advice related to various forms of  cryptocurrency investments. The SEC has also dealt with a number of similar cases in the past. The agency has decided to treat these tokens as securities, and therefore, various cryptocurrencies are currently subjective to US Securities Law.

Despite stricter regulations, the number of cryptocurrency-related frauds is on the rise. As a result, the CFTC's Enforcement Director and the SEC's Enforcement Co-Directors did not waste time in taking a harsh stance against this industry.

The SEC and CFTC will now examine criminal activities even more thoroughly, especially those committed “under the guise of offering digital instruments.” This includes digital tokens and currencies, as well. They have made it clear that violators of the federal securities and commodities laws will be prosecuted.

Cryptocurrency advocacy and research group, Coin Center, showed approval of this joint effort of the two bodies. The company’s executive director was glad to have both agencies work together to target cryptocurrency-related scams.

No one can deny that 2017 was an exceptionally good year for cryptocurrencies. The industry gained immense popularity and attracted big fish investors from all over the world. Many of these investors have become millionaires overnight. However, losing one's entire capital in a handful of cryptocurrency trades is just as easy, due to the notorious volatility of the market.

Bitcoin, ethereum, and all other cryptocurrencies are unregulated. Digital currencies and initial coin offerings are therefore a subject of controversy in financial institutions. The SEC also formed its Cyber Unit last September, making digital assets an enforcement priority.

This strict warning is a heads-up for investors who are pouring money into this space without proper awareness of possible consequences. Many fake ICOs and related frauds are likely to be uncovered as a result of this regulation.
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