Bitcoin frenzy sparks Finra cryptocurrency warning
Investor alert advises wariness over too-good-to-be-true stock stories.
The Financial Industry Regulatory Authority Inc. has issued an investor alert warning investors to beware of potential stock scams in connection with companies associated with cryptocurrencies, such as bitcoin, that tout high returns.
“Unrealistic predictions of exponential returns and unsubstantiated claims made through press releases, spam email, telemarketing calls, or posted online or in social media … may be signs of a classic ‘pump and dump’ fraud,” Finra said, noting that people touting such deals are typically unlicensed.
(Editorial: Cryptocurrency mania poses a challenge to advisers)
The attention focused on bitcoin and investors who have earned astronomical returns from the cryptocurrency and companies associated with it can be luring, Finra said.
“But it is important to do your research. Even when legitimate companies enter a hot, new sector, con artists almost always follow suit,” said Gerri Walsh, Finra’s senior vice president for investor education.
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