Digital currency scams are big business. It’s estimated that scammers took in over $4 billion in 2019! Cryptocurrency, as it is also called, can be a legitimate investment. But before you sink any real-world money into it, be sure you know exactly what you’re buying.
This type of currency isn’t like the money in your savings account. Instead, it’s a digital-only type of currency that is not backed by a government or central bank. You can’t store Bitcoin in your wallet or take it to the store to buy groceries.
However, Bitcoin can be used to make certain purchases online, and you are able to convert it into US dollars by using an online exchange. Unfortunately, Bitcoin is only worth whatever the market says it is. There is no Federal Reserve monitoring the value of cryptocurrency. While some people–especially early adopters–have made a lot of money, not everyone has been so lucky.
And that’s just the deal with “legitimate” cryptocurrency.
If you’re curious about investing in cryptocurrency, proceed with caution.
As ever, if it sounds too good to be true, it almost certainly is. If someone guarantees that you’ll make money–such as promising that you’ll double your investment in sixth months or become a millionaire in a year–then you should not trust them. Legitimate financial advisors will always tell you that there’s no such thing as a sure bet.
Before you invest any money, do a quick search of the company name along with the word “scam” or “complaint.” That’s a fast and easy way to find negative information about the cryptocurrency online. It should always be your first step in performing due diligence.
Check the website you visit to make sure it’s marked “https.” That means it’s secure. Many browsers also show a lock icon in the address bar when you’re visiting a safe site. Be wary of any site that sends you to a new page to complete payment. If that happens, check the URL in the address bar to see if it looks different. Even a small change in the address could indicate that you’re getting sent to a fraudulent page to enter personal financial information.
Just last year, the Securities and Exchange Commission shut down META 1 Coin, a cryptocurrency that was gaining popularity. The SEC claims that the currency rooked investors out of $9 million.
There were plenty of warning signs about the cryptocurrency. For one thing, they were aggressively promoting themselves on social media, especially Instagram, with trendy hashtags. For another, they hired a YouTube psychic to be a trustee on their board of directors.
Former Republic congressman Dave Schmidt also sat on the board of META 1. Schmidt was later discovered using Washington state funds as his personal piggy bank, to the tune of $32,000.
The board of META 1 claimed that their currency was backed by $1 billion in art, as well as another $2 billion in gold. “In reality the Coin is backed by nothing,” SEC Attorney Jennifer Reece stated.