Investors in Bitcoin in Jersey are being warned about scams which con people into handing over their cryptocurrency in exchange for worthless assets.
The financial regulator, the JFSC, has taken the unusual step of issuing a formal warning about Initial Coin Offerings (ICO) which attempt to raise funds by issuing digital token in exchange for an amount of cryptocurrency – but the tokens could be for businesses or projects with no real value.
They’re often advertised as ‘token sales’ or ‘token-generating events’ and are often unregulated, meaning investors who fall foul have no protection.
The JFSC says: “We recognise the innovative potential of distributed ledger/blockchain technology and Fintech more generally, and support efforts to responsibly innovate in Fintech in Jersey. However, we are concerned about retail investors participating in ICOs which are typically highly speculative and risky.”
Their advice to anybody thinking of taking part in a token sale is to ensure they carefully consider the risks and how they relate to the offer. They add that investors should be sufficiently experienced and knowledgeable and confident in the quality of the ICO project itself.
