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Cryptocurrency Fraud Widespread, Warns Regulator –
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Cryptocurrency Fraud Widespread, Warns Regulator –

by Raphael PutongApril 10, 2018

Fraud among cryptocurrency investment promoters is widespread, the state regulator most active in the crypto arena warned today.

Of 32 cryptocurrency investment promoters investigated in four weeks, at least five failed to tell would-be investors about the risks while guaranteeing returns of up to 40 percent a month, the Texas State Securities Board cautioned.

Nearly two-thirds of the promoters did not provide investors with a physical address.

Without a physical location, the Board, warned investors may not be able to locate a promoter to serve it with legal process or attempt to pursue other remedies once they have been defrauded.

A report from the regulator noted many cryptocurrency solicitations played on Bitcoin’s sharp increase in price, even though the investment being marketed to investors had nothing to do with the most famous brand in digital currencies.

Left unsaid in promotions, said the report, is the prospect of hackers penetrating security systems and disrupting an investment program or absconding with cryptocurrencies.

The Board said investors should not be lulled into a false sense of confidence in promoters by handsome photographs and glowing vitae on their websites.

“Charming portraits and lengthy profiles may convey a sense of comfort and security, but virtually anyone from anywhere may be lurking behind the flashy graphics,” the report warned.

As an example, the Board saw one of the principals at Leadvest, a cryptocurrency firm it took an emergency action against, was listed as “Lucy Besson.”

However, the portrait of Besson, a professional allegedly responsible for cryptography and data analysis, was really a stock photograph of a model, the Texas regulator noted.

In addition, a photo from Leadvest’s Code of Ethics Association, was from a decade-old publication of the George Washington School of Law.

The photo included former U.S. Solicitors General and U.S. Supreme Court Justice Ruth Bader Ginsberg, the report said.

The Board urged retail investors not to sign-up with cryptocurrency promoters as marketers with the aim of reaping finder’s fees from luring friends and relatives to become marketers themselves.

Without proper licensing, the consequences for individuals can be severe including administrative, civil or criminal actions, the Board warned.

None of the 32 promoters of cryptocurrencies were registered to sell securities in Texas.


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Raphael Putong