The top ten questions you should ask before investing in #blockchain #bitcoin #ripple #ethereum #bitcoincash #cardano #stellar #litecoin #XEM #MIOTA #Dash #cruptocurrency #altcoin #darkcoin are:

1. Who exactly am I contracting with?

A major consideration is who are you contracting with. It is important to check their backgrounds by performing a google search of their names and the company’s name. It’s important to exercise professional skepticism based upon what you find as a result because some of the content could be sponsored. In such a case, it may not be independent. Many Initial Coin Offerings issue white papers as business plans. You should read the white paper to determine if a business plan exists. A final consideration is to ascertain where are they located. Are you contracting out of state or out of country?

2. Where is my money going and what will be it be used for?

Is my money going to be used to “cash out” others?

3. What specific rights come with my investment?

4. Are there financial statements?

If so, are they audited, and by whom?

5. Is there trading data?

If so, is there some way to verify it?

6. How, when, and at what cost can I sell my investment?

For example, do I have a right to give the token or coin back to the company or to receive a refund Can I resell the coin or token, and if so, are there any limitations on my ability to resell?

7. If a digital wallet is involved, what happens if I lose the key?

8. Are there substantial risks of theft or loss, including from hacking?

9. If a blockchain is used, is the blockchain open and public?

Has the code been published, and has there been an independent cybersecurity audit?

10. Has the offering been structured to comply with the securities laws and, if not, what implications will that have for the stability of the enterprise and the value of my investment?

What legal protections may or may not be available in the event of fraud, a hack, malware, or a downturn in business prospects? Who will be responsible for refunding my investment if something goes wrong?

The SEC’s full list is available at www.cjzfirm.com/bitcoin/ @ 11 DEC 2017 Update and at Jay Clayton’s Statement on Cryptocurrencies and Initial Coin Offerings SEC and Statement of Chairman Jay Clayton and Commissioners Kara M. Stein and Michael S. Piwowar on “NASAA Reminds Investors to Approach Cryptocurrencies, Initial Coin Offerings and Other Cryptocurrency-Related Investment Products with Caution” by NASAA

Links

NASAA’s Common Cryptocurrency Concerns

Some common concerns investors should consider before investing in any offering containing cryptocurrency include:
  • Cryptocurrency is subject to minimal regulatory oversight, susceptible to cybersecurity breaches or hacks, and there may be no recourse should the cryptocurrency disappear.
  • Cryptocurrency accounts are not insured by the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits up to $250,000.
  • The high volatility of cryptocurrency investments makes them unsuitable for most investors, especially those investing for long-term goals or retirement.
  • Investors in cryptocurrency are highly reliant upon unregulated companies, including some that may lack appropriate internal controls and may be more susceptible to fraud and theft than regulated financial institutions.
  • Investors will have to rely upon the strength of their own computer security systems, as well as security systems provided by third parties, to protect purchased cryptocurrencies from theft.

Common Red Flags of Fraud

NASAA also reminds investors to keep watch for these common red flags of investment fraud:
  • “Guaranteed” high investment returns. There is no such thing as guaranteed investment returns, and there is no guarantee that the cryptocurrency will increase in value. Be wary of anyone who promises a high rate of return with little or no risk.
  • Unsolicited offers. An unsolicited sales pitch may be part of a fraudulent investment scheme. Cryptocurrency investment opportunities are promoted aggressively through social media. Be very wary of an unsolicited communication—meaning you didn’t ask for it and don’t know the sender—about an investment opportunity.
  • Sounds too good to be true. If the project sounds too good to be true, it probably is. Watch out for exaggerated claims about the project’s future success.
  • Pressure to buy immediately. Take time to research an investment opportunity before handing over your money. Watch out for pressure to act fast or “get in on the ground floor” of a new tech trend.
  • Unlicensed sellers. Many fraudulent investment schemes involve unlicensed individuals or unregistered firms. Check license and registration status with your state or provincial securities regulator. Contact information is available here.

SEC’s Sample Questions for Investors Considering a Cryptocurrency or ICO
Investment Opportunity

  • Who exactly am I contracting with?
    • Who is issuing and sponsoring the product, what are their backgrounds, and have they provided a full and complete description of the product?  Do they have a clear written business plan that I understand?
    • Who is promoting or marketing the product, what are their backgrounds, and are they licensed to sell the product?  Have they been paid to promote the product?
    • Where is the enterprise located?
  • Where is my money going and what will be it be used for?  Is my money going to be used to “cash out” others?
  • What specific rights come with my investment?
  • Are there financial statements?  If so, are they audited, and by whom?
  • Is there trading data?  If so, is there some way to verify it?
  • How, when, and at what cost can I sell my investment?  For example, do I have a right to give the token or coin back to the company or to receive a refund?  Can I resell the coin or token, and if so, are there any limitations on my ability to resell?
  • If a digital wallet is involved, what happens if I lose the key?  Will I still have access to my investment?
  • If a blockchain is used, is the blockchain open and public?  Has the code been published, and has there been an independent cybersecurity audit?
  • Has the offering been structured to comply with the securities laws and, if not, what implications will that have for the stability of the enterprise and the value of my investment?
  • What legal protections may or may not be available in the event of fraud, a hack, malware, or a downturn in business prospects?  Who will be responsible for refunding my investment if something goes wrong?
  • If I do have legal rights, can I effectively enforce them and will there be adequate funds to compensate me if my rights are violated?

 

#blockchain #bitcoin #ripple #ethereum #bitcoincash #cardano #stellar #litecoin #XEM #MIOTA #Dash #cruptocurrency #altcoin #darkcoin