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Cointelegraph has collected the SEC recommendations for ICO investors and compiled a comprehensive list of the most important tips.
Today the Securities and Exchange Commission (SEC) rolled out an investor alert which advises investors to be careful of trading in the stock of public companies claiming to be related to or asserting they are engaging in, Initial Coin Offerings (or ICOs).
This is the latest twist in the ICO saga where the earlier alerts were more focused on addressing the token sale offerings made by startups or non-public companies.
With this increased focus from the regulators, we may very well see much more detailed oversight of these potential offerings and maturing of the market to ensure that quality projects with high-quality development teams are funded using this new investment mechanism.
It remains to be seen though as to how the future steps are planned by the regulators to ensure that all these offerings continue to abide by the laws of the land and investor community does not suffer.
The SEC has detailed the below-mentioned tips for investors which are meant to educate the public against possible fraud schemes and help protect investor interest. The advice has been reproduced below from the bulletin for readers ease.
Look out for these warning signs of possible microcap fraud:
In the past month the SEC has ordered stock trading freezes of the publicly traded companies namely First Bitcoin Capital Corp., CIAO Group, Strategic Global and Sunshine Capital.
All of these firms have seen changing hands multiple times and have publicly stated plans for potential cryptocurrency offerings and ICOs before the SEC took note and ordered the stock trading freeze.
With the explosive growth in the ICOs, regulators around the world have started taking note and issued advisories to better educate investors about the potential securities laws violations.
Regulators in US, Canada and Singapore have issued specific guidelines in this regards to help investors better understand what constitutes as securities and what doesn't.
The regulators are specifically wary of pump and dump schemes whereby certain coin offerings may be used specifically to inflate their price post offering so that vested interests could then dump them at a profit.
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