The FTC has made it clear that it intends to protect consumers from fraudulent activity in crypto. They are going to pursue a legal framework, which encourages a competitive market to exist. This latest action is an indication that they are beginning to get serious. In the past few years, many questionable projects based on the blockchain have emerged, with a few being outright scams. For instance, some have promised users returns, which are unheard of in the world of finance. However, to achieve this, investors usually have to recruit more users, which is how a Ponzi scheme works. The FTC has already filed a case in court against two such projects, which they believe have defrauded over thirty thousand investors around the world.
Details of the Lawsuit
According to a report in the Washington Post, the lawsuit is going to focus on the chain referral projects in the digital currency space. One of the most famous scams in recent times is the Bitconnect scam, which collapsed in January 2018. Bitconnect has not been mentioned in this lawsuit. However, people lost hundreds of thousands of dollars in the project, which has forced the FTC to take a closer look at crypto scams. In the scam, the price of Bitconnect rose to $320, and within just a few minutes it had dropped by over 80 percent. It then continued to drop to its current level of just about $1.62.
Projects That Offer Improbable Returns
According to the lawsuit, the FTC have said that over 30,000 people were roped in by the scam globally. Action has already been taken against some of the men involved in these scams. A federal court ordered four men to cease all operations in the state of Florida. According to the details of the lawsuit, the men promoted their fraudulent project on sites such as Twitter and YouTube.
The two companies being investigated right now are My7Network and Bitcoin Funding Team. The two companies lied to consumers, saying that they could make a small hundred-dollar investment and get $80,000 monthly. While that would have been great, no investor ever saw such returns after making their investment.
What Is Being Done to Protect the People?
The government and other major companies are already taking steps to try to stop this wave of scams. For instance, Google recently followed Facebook by announcing they would no longer allow crypto related ads on the advertising platform. The technology that powers Bitcoin could one day change the world. However, right now it seems to have created an easy conduit for criminals to steal money from the masses.
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