The US Commodity Futures Trading Commission (CFTC) has issued a warning against pump-and-dump schemes involving cryptocurrencies.
"Pump-and-dump schemes long pre-date the invention of virtual currencies, and typically conjure the image of penny stock boiler rooms, but customers should know that these frauds have evolved and are prevalent online,” said CFTC Director of Public Affairs Erica Elliott Richardson.
The CFTC encourages all customers to thoroughly research potential investments, stay informed about tactics commonly used in investment fraud, and avoid investment opportunities they don't fully understand.
The latest advisory focuses in part on a key avenue for cryptocurrency promotion: social media. It warns against purchasing virtual currency or tokens based on tips shared over social media.
“Customers can best protect themselves by purchasing only alternative virtual currencies, digital coins, or tokens that have been thoroughly researched – to separate hype from facts,” CFTC said.
The CFTC said it has received complaints from customers who have lost money to pump-and-dump schemes, and urged to report suspicious activities or information, such as possible violations of commodity trading laws.