Nashville, TN – The virtual currency known as cryptocurrency is riding a wave of public interest amid a frenzy of recent news stories touting record high valuations for the digital-only currency.
Bitcoin, which is the most well-known cryptocurrency, broke records this week with its values on Wall Street now topping more than $270 billion, according to news reports.
[1]Before making any decisions about investing in cryptocurrency, TDCI urges Tennessee investors to not be gullible, ask tough questions first and understand the risks before making an investment.
Cryptocurrency is a digital currency and is not backed by a bank or a government and has no physical presence in the real world.
Instead, cryptocurrency exists solely online.
As questions and speculation arise about cryptocurrency, the Tennessee Department of Commerce and Insurance (TDCI) Securities Division wants Tennessee investors to get all the facts before investing and be on guard for cryptocurrency scammers who might use Bitcoin mania to line their own pockets.
“The potential for scammers to use cryptocurrency for their own nefarious ends is quite real since, unlike real money, digital currency is unregulated and can be earned or spent anonymously,” said TDCI Assistant Commissioner Frank Borger-Gilligan. “Before making any decisions about investing in cryptocurrency, we urge Tennessee investors to not be gullible, ask tough questions first and understand the risks before making an investment.”
How do you spot a scammer? According to digital risk-monitoring company Zerofox [2] Bitcoin scams can be detected a number of ways, including:
- Malware downloads. Scammers will often use bitcoin to lure investors to download software that will harm their computer. Fake Bitcoin surveys are often used to distribute malware. Use caution when encountering any social media URL that is either shortened or not secured with an HTTPS connection.
- Bitcoin phishing impersonators. Scammers create a phishing website that promises a search service enticing users to enter in their private bitcoin key to see if it exists in their database. Once entered, the private key will be phished, allowing the scammer to spend directly from the Bitcoin owner’s wallet.
- Bitcoin-flipping scams. These scams offer victims a chance to instantly exchange Bitcoins for money after paying an initial startup fee or a promise to double initial investments. Unfortunately, the bargain is never honored, and bitcoins are stolen immediately.
- Bitcoin pyramid schemes. Scammers trick investors by offering them a low initial investment that can be multiplied by signing up additional members using referral links. Before long, hundreds of victims have joined the scheme while the original scammer walks away and the pyramid collapses.
Sound complicated? We can help. Before making an investment in cryptocurrency, The Tennessee Securities Division can be contacted at 615.741.2947 or online at Securities1@tn.gov [3].