When it comes to investing in cryptocurrencies, the cryptocurrency world is unfortunately still prone to scam artists and hucksters. Just like with any investment, investors need to do their due diligence and research their investments and who they trust their money with, not just relying on a big name and a great reputation. Just look at all the people who were taken in by Allen Stanford and Bernie Madoff, trusting that the numbers they were seeing were accurate, when in fact they were victims of a Ponzi scheme. Then look at an area like cryptocurrencies, where the history behind firms can’t be more than a decade old, and you see the difficulties that most investors face.
That’s why many investors can get taken in when people from supposed mainstream financial firms pitch them on cryptocurrencies. That’s the case with a current lawsuit against Wells Fargo Advisors, one of whose employees is being accused of involvement with a fraudulent scheme to bilk investors out of their money.
The scheme, known as Q3, targeted doctors and traded off the fact that one of the participants in the scheme worked for Wells Fargo. Trading off the firm’s reputation, the scammers defrauded 150 investors out of $35 million. While they claimed that their investment fund was trading in cryptocurrencies and guaranteed 15% returns per month, the money was actually being funneled into personal accounts and being used to fund lavish lifestyles. Any money invested in cryptocurrencies was lost in trading.
The scheme started in 2017, when cryptocurrencies first really hit the mainstream and Bitcoin and other cryptocurrencies were hitting all-time highs. Thus it’s not surprising that many investors who may not have been knowledgeable about cryptocurrencies didn’t bat an eye about the promises of 15% monthly returns.
Now that cryptocurrencies have come back to earth, their performance isn’t as stratospheric as it once was. While Bitcoin may have gained 8.9 million percent in its first decade, now its annual gains are merely in the double digits. While that may not captivate the imaginations of those who want to get rich quick, its performance last year was still superior to stock markets, making Bitcoin a good choice for investors who want to diversify their portfolios while not sacrificing the possibility of good investment gains.
But just as with any investment, investors need to do their due diligence, determine what types of investment vehicles they want to use, and choose a cryptocurrency firm with a solid track record of helping clients. Don’t let the promise of easy money part you from your hard-won investment assets.