Despite the emergence of many new technologies in recent years and the successes of globalization, one thing remains unchanged: if something suddenly becomes popular, scammers will find new ways to deceive investors. The way out, as always, is one: try to think with your head.

This also applies to crypto-currency, which is increasingly becoming the target of theft and fraud. The latest scandal in the turn of many is the  breaking of the Japanese currency exchange Coincheck,  as a result of which hackers received NEM tokens worth more than half a billion dollars. Thus, this is the largest theft of the crypto currency for today.

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President of Coincheck Koichiro Wada (left). The Japanese authorities said on January 29 that they had been subjected to penalties by Crypto-Exchange Coincheck, which lost $ 14 million tokens.

“We will do everything possible to make significant changes to our platform and restore the confidence of customers and the community,” Coincheck said in her blog. Despite this, regulators around the world are alarmed.

The Commission  on the  Securities  and Exchange Commission (SEC) of the USA has recently taken measures to block ICO, in which, according to the agency, “offered to retail investors to finance what was served as the world’s first decentralized Bank.”

“AriseBank and its co-founders Jared Rice Sir and Stanley Ford supposedly offered to make unregistered investments in AriseCoin crypto currency and attracted funds, representing AriseBank as the first of its kind decentralized bank offering various retail banking products and services and working with more than 700 different virtual currencies … The AriseBank presentation stated that it developed an algorithmic trading application that trades various crypto-currencies in an automatic mode, “the SEC states.

Now in the world there is no regulated bank that would directly deal with retail sales or storage of crypto currency. The situation may change when and if regulators find a way to pursue their policy on an unregulated crypto currency market.

And although the idea of ​​the  blockade that underlies  bitcoin  and other crypto-currency technologies is generally good, the crypto-currencies are not a decentralized bank at all. They are not tied to anything other than software, and it is difficult to understand who trades them and why.

There is also a cult of bitcoin, which explains the irrational enthusiasm that allows its price to grow by hundreds of percent. Here is what Paul Krugman, a New York Times columnist  and Nobel laureate in economics writes  :

Bitcoin has lost about 40% of the cost in the last six weeks. If it were a real currency, it would be equivalent to an annual inflation of about 8000%. The fact that bitcoin is not tied to any asset makes it very susceptible to market manipulation. “

As in the case of any other  trend  in the financial market, those who do not understand what they are doing will suffer. Here are some excerpts from the SEC’s warning about companies entering the ICO:

  • Some companies are not required to file reports with the SEC. They are known as “non-reporting companies”. Investors should be aware of the risks of trading in the shares of such companies, since there is no relevant and accurate information that would allow investors to make an informed investment decision.
  • Investors should also conduct their own research and know that information in blogs, social networks and even on the company’s website can be inaccurate and deliberately misleading. Be especially careful with the offers of buying  securities , including those related to new technologies, such as ICO.
  • If the issue (security) is registered, you can find information about it (for example, application for registration or “Form S-1”) on the website   through the EDGAR search system  .

In other words, you have to do your own research. One or more new technologies may make crypto currency a viable alternative to the existing banking system, but it is difficult to say which of them will survive. In the meantime, you need to protect your savings.

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