The U.S. Commodity Futures Trading Commission (CFTC) has cautioned customers against cryptocurrency-based pump-and-dump schemes.
“Customers should not purchase virtual currencies, digital coins, or tokens based on social media tips or sudden price spikes. Thoroughly research virtual currencies, digital coins, tokens, and the companies or entities behind them in order to separate hype from facts,” the CFTC said.
The regulator believes that cryptocurrency and digital token pump-and-dump schemes continue due to their anonymity feature. It said:
“These pump and dumps occur in the largely unregulated cash market for virtual currencies and digital tokens, and typically on platforms that offer a wide array of coin pairings for traders to buy and sell. While the scams have been around as long as the virtual currency markets themselves, the number of new virtual currency and digital coin traders has grown substantially, increasing the number of potential victims or unwitting perpetrators.”
Last year, the Securities and Exchange Commission (SEC) also issued a similar warning to customers.
Both, the CFTC and the SEC have urged customers to thoroughly research alternative virtual currencies, digital coins, or tokens before making an investment.
