The Securities and Exchange Commission has obtained an injunction stopping an initial coin offering by AriseBank which had already raised 600 million dollars and was still seeking 400 million dollars from investors. Jordan Belfort has called ICOs the “biggest scam ever” and Belfort knows something about scams, having been convicted of money laundering and stock manipulation in 1999. His story became the basis for the movie The Wolf of Wall Street.”
ICOs are a way for companies to raise money selling crypto currency tokens instead of company shares. With cryptocurrencies such as Bitcoin reaching astronomical heights in value, many people are flocking to these ICO’s. More than 3 billion dollars has been raised this year through ICOs. Unfortunately, many people investing in ICOs do so without knowing much about the specifics of the particular offering and while Belfort himself has said that although 85% of the people issuing the ICOs may be well intentioned that leaves many people operating ICOs as scams. China has banned ICOs and the SEC is warning people to be wary of ICO scams. In the case of AriseBank, the SEC alleges that AriseBank failed to file the required SEC registration documentation and also made numerous false claims to investors including a false claim that it offered FDIC insured accounts for the ICO. Perhaps most disturbing was that AriseBank failed to disclose to investors that its co-founder, Jared Rice Sr. had been convicted of felony theft and tampering with government records and its president, Kelvin Spencer had multiple convictions.
As I have preached many times, you should never invest in anything unless you totally understand what you are investing in. In addition, you should always investigate the people who are offering a particular investment before investing.
Legendary investment guru Warren Buffet is not a believer in ICOs and views cryptocurrencies as a bubble that will eventually burst and cause investors to lose large amounts of money.
Never invest in a company unless you have researched it carefully. The SEC advises you to be particularly cautious when investing in ICOs. In particular, the SEC says to not take at face value representations of companies issuing ICOs that they are SEC-compliant.
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