On February 15, 2018, the CFTC issued a customer protection advisory, warning customers of fraud occurring in virtual currencies and coin offerings. The advisory warned market participants not to:

According to the advisory, the virtual-currency and digital coins and tokens industry is still a relatively new one and as such is only marginally traded. The thin, largely unregulated cash market for digital assets combined with the public’s newfound interest in them makes the area extremely susceptible to targeted fraud. The advisory notes that the best protection for customers is to buy virtual currency only after doing thorough research.

The warning comes on the heels of complaints received by the CFTC from customers who have fallen victim to these schemes, which are oftentimes anonymously organized in public chat rooms or mobile messaging apps within which members in the thousands are shown false new stories perpetuating claims about a currency or coin that is about to skyrocket in value thanks to a wealthy investor. At the time the scam occurs, organizers entice customers by counting down to the buy signal for the coin that’s to be bid on, and promoting the exchange platform where it’s taking place. It only takes minutes for the scheme to be complete.

Suspicious activity or fraud in virtual currencies may be reported to the CFTC at 866-366-2382 or at CFTC.gov/TipOrComplaint.