SEC warns of increasing ICO frauds
The US Securities and Exchange Commission has published on its website the official warning, informing investors of the growth of ICO scams.
In particular, the SEC says that fraudsters use ICOs for a standard scheme of money collection and further abandonment of obligations. Besides, the commission stresses a new type of scam where ICOs are used to drive up the price of company stocks on conventional exchanges.
“Despite the fact that ICOs can provide investors with fair opportunities, there are situations when a public ICO announcement influences a price of common company stocks. In such a case, the SEC has the right to suspend stock trading for investigating circumstances,” according to the official statement.
Moreover, the SEC describes several tips for investors, helping to determine scams in ICOs with great probability.
“If the company asserts that its ICO is protected by the SEC but does not specify how exactly, it can be a distinctive feature of fraud. If the company owing common stocks is striving for raising funds using an ICO, pay attention to uncertain and repugnant conditions, especially if they are accompanied by technical and legal terms. Follow company’s press releases and advertising activity. You should also draw attention to frequent changes of organization names,” the SEC notes.