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Recent Bitcoin Scams Remind Investors to Remain Wary

Businessman in bitcoin price increase concept

Some recent fraud cases should serve as a warning to investors that they need to be careful when investing in cryptocurrencies. More than ever, investors need to remember the principle of caveat emptor. Being complacent in doing due diligence about investment opportunities in Bitcoin and cryptocurrencies could cost them dearly.

The Commodity Futures Trading Commission (CFTC) brought two new cases to court last week dealing with fraudsters who tried to mislead Bitcoin investors. One of the cases dealt with a business that sought to acquire bitcoins from investors, claiming that they would pool those bitcoins and invest them in various products. Instead, the operation acted as a classic Ponzi scheme. The second case dealt with a company that purported to offer investment advice and asset management services to Bitcoin investors but instead stole their bitcoins.

Additionally, Bitcoin exchange Bitconnect finally shut down its operations last week in response to actions taken by regulators. The site had long been suspected of engaging in Ponzi-like activity on its lending platform, requiring users to purchase BCC coins with their bitcoins and then lend those BCC coins. Promised returns ranged from 60% per month just for holding BCC coins to 40% per month for those who lent their coins. But after cease and desist letters from regulators in Texas and North Carolina, Bitconnect decided to shut its doors.

These schemes should caution investors to be careful with their money. Just as with any investment opportunity, if it seems to be too good to be true, it probably is. Yes, many people have made large returns from cryptocurrencies through legitimate means, but many others have also lost money through foolish investing.

Rather than chasing the highest advertised return, investors should make sure that the investment model they decide to pursue is a sound one. That’s why investment products such as Bitcoin IRAs offer so many advantages. Rather than handing over control of your Bitcoin to an anonymous online exchange, Bitcoin IRAs require an established custodian to secure your holdings.

The custodians with whom CoinIRA works have long track records of keeping investor assets secure, so they can be trusted to keep your holdings safe. Bitcoin IRA custodians also make sure that they remain in compliance with all federal and state regulations, and they won’t push you to hand over control of your bitcoins, or recommend that you engage in lending or other investment with your Bitcoin holdings. Don’t let your guard down just because you think you can make a lot of money. Make sure to invest your money with someone you can trust.