Crypto Fraud Lawyer


Cryptocurrencies have changed the way that many businesses are conducted. Cryptocurrencies are both a recognized means of payment and an investment. Many have made a great deal of money trading cryptocurrencies, such as Bitcoin and Ethereum. However, the profit potential also causes some unscrupulous market participants to engage in fraudulent schemes.

Unsuspecting investors may be caught up in these schemes and lose large sums of money. If you have been the victim of crypto fraud, you may be able to take legal action to recover some or all of the money that you have lost. Contact the aggressive crypto scam attorneys at Investor Loss Center to learn more about your legal options.

Cryptocurrency Scams and Volatility

Over the past decade, the number of cryptocurrencies has increased from seven to more than 23,000. Many people are spotting opportunities to make significant money in crypto and take advantage of those who are less informed and savvy. Place this against the backdrop of extremely volatile securities, and this is a recipe for disaster.

Cryptocurrencies are so new that it has taken regulators a fair amount of time to catch up to the activities of market participants. There are so many cryptocurrencies, and the public still knows very little about them, which makes it conducive for brokers and others to perpetrate fraud.

Examples of cryptocurrency scams and frauds include:

  • Requesting an upfront fee for investing a client’s money and subsequently stealing the fee
  • Establishing a fake cryptocurrency exchange and misappropriating any money deposited
  • Designing fake cryptocurrency coins to entice deposits that are then stolen
  • Misappropriating investor assets
  • Enticing investors through Ponzi schemes

There are new cryptocurrency schemes occurring almost daily as fraudsters become more creative in stealing money. Some customers have lost practically their entire life savings in these scams.

What the SEC and FINRA Are Focused On

Regulators are beginning to get smarter and are learning to detect and take action against crypto frauds. The Financial Industry Regulatory Authority (FINRA) has begun to push out information to investors to help them protect themselves from investment fraud and scams. FINRA has also begun to monitor members and how they market and sell cryptocurrencies. The regulator is focused on the accuracy and truthfulness of communications and whether members are recommending suitable investments to their customers.

The SEC’s ability to regulate cryptocurrencies depends on whether they meet the Howey test for being securities. The SEC determines whether an individual currency is a security before determining whether they can take any enforcement action. Recently, the SEC has gone after Coinbase for operating as an unregistered exchange.

Regulators’ focus shifts over time as they learn more about a certain product and area. Both the SEC and FINRA will likely become more active in regulating cryptocurrencies, especially since the SEC recently approved multiple crypto exchange-traded funds.

Financial Advisors and Brokers Selling Crypto

Brokers are learning there is quite a bit of money to be made from selling crypto investments to their customers. Since these financial instruments are so volatile, brokers are taking larger markups and trading with their customers at wider spreads. Other securities face a more saturated market, where brokers are fighting and competing to win limited customer business.

With crypto, brokers still have large profit margins and can set the terms of dealings with customers.

As a result, brokers may have an incentive to recommend a security that may not be suitable for their customer’s investment. They may push customers to invest in cryptocurrencies by using misleading communications and high-pressure sales tactics.

Crypto Exchange Disputes

Crypto exchanges are considered middlemen where buyers and sellers meet and trade in crypto products. However, customers often have disputes with these exchanges, either based on outages or how the exchange enforces its rules. It is possible to file a lawsuit against the crypto exchange to recover losses.

Crypto exchanges may cost their customers money by misappropriation of assets (as happened in the case of FTX). Since a crypto exchange is not a registered broker, you can file a lawsuit against them (unless your customer agreement contains a clause that requires you to arbitrate any dispute, as they often do).

What to Do if You Have Been the Victim of Crypto Fraud

Regardless of who regulates the broker or the individual crypto security, nobody has a legal right to defraud you. If the broker who committed crypto fraud was registered with FINRA, you can file an arbitration claim against them under FINRA rules. If you win your case or reach a settlement agreement, you may be able to recover some or all of your money. If the fraudster was not registered, you may be able to file a lawsuit against them in state or federal court.

The first thing that you need to do is hire an experienced crypto fraud lawyer to help you discover what happened and take legal action on your behalf. With crypto assets still being relatively new and a bit opaque, it may take some doing to figure out how you were defrauded and what you can do to get justice. You can trust your attorney to handle the details of your case and put you in a position for financial recovery.

Contact a Crypto Fraud Attorney Today

The attorneys at Investor Loss Center have a long track record of getting justice and results for our clients who have been defrauded. We can take aggressive legal action on your behalf, as you seek to recover as much money as you possibly can. You can speak to one of our attorneys during a free initial consultation, during which we will review your case and explain possible next steps. To speak with a lawyer, send us a message online or call us today at (803)-805-7546.



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