The U.S. Securities and Exchange Commission (SEC) has warned investors to be wary of companies claiming involvement with initial coin offerings (“ICO”) as there is a high risk of ICO fraud. The investor alert comes shortly after last month’s SEC statement that coins sold as part of an ICO should be considered ‘securities’. The SEC warns that ICO fraudsters may be trying to exploit the new digital-token technology.

ICO Fraud Points to Market Manipulation

The SEC issued an investor alert saying that public companies may claim to provide exposure to so-called ICOs as a way to convince potential victims to invest. Pointing to a string of recent trading suspensions related to ICOs, investors may fall victim to market manipulation scams.

“There may be situations in which companies are publicly announcing ICO or coin/token-related events to affect the price of the company’s common stock,” the alert said.

In particular, the SEC noted the recent trading suspensions of First Bitcoin Capital Corp., CIAO Group, Strategic Global and Sunshine Capital, which the Commission said made claims about their investments in coin offerings or other token-related activity.

On August 24th, First Bitcoin Capital Corp.’s shares were temporarily suspended for concerns about the accuracy and adequacy of publicly available information about the company, including the value of assets and its capital structure. First Bitcoin responded with a same-day letter to shareholders that suggested the suspension was “drastic” and would be resolved with some clarification.

The suspension shows that the SEC is aware of the activity taking place in digital token space and wants investors to be wary. The SEC also warned investors last month about the potential risks of participating in ICOs, including the limited recovery options if something goes wrong.

Are You the Victim of ICO Fraudsters?

If you believe you have been the victim of fraud committed by ICO fraudsters, you may have certain legal rights that require your immediate attention.

Call an Investment Fraud Attorney Today

If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.

With offices in Los AngelesNew YorkWest Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

EN   ES   PT     

Miami Office
Grand Bay Plaza
2665 S. Bayshore Drive
Penthouse 2B
Miami, FL 33133
Telephone: 786.628.8236

Los Angeles Office
Available by Appointment
2029 Century Park East
Century Plaza Tower
Suite 400N
Los Angeles, CA 90067
Telephone: 424.544.7930

New York City Office
Available by Appointment
14 Wall St, 20th Floor
New York, NY 10005
Telephone: 917.382.5217

West Palm Beach Office
Northbridge Centre
515 N. Flagler Drive, Suite P-300
West Palm Beach, FL 33401
Telephone: 561.475.2887

Detroit Office
41000 Woodward Avenue,
Suite 350 East
Bloomfield Hills, Mi 48304
Telephone: 248.368.0182