What is a cryptocurrency scam?

The SEC has announced today March 8th, 2022, that they’ve charged two siblings in connection with a global fraud scheme involving the cryptocurrency digital coin “Ormeus Coin”. Siblings by the names of John Barksdale and JonAtina (Tina) Barksdale started the fraud digital token operation in June of 2017 and in total have defrauded retail investors over $124 million. The SEC said that the sibling duo intentionally misled investors through social media marketing and falsely advertising the cryptocurrency coin — they told investors that the Ormeus Coin was supported by the largest crypto mining operations globally. They falsely claimed that the crypto mining operation was generating $5.4 million – $8 million in revenue per month when it was not operating near that amount or at all. While at one point the siblings did have a crypto mining operation, they discontinued it in 2019 after generating less than 3 million dollars.  John Barksdale worked on the front end of the scam by orchestrating road shows around the world and promoting the fraudulent investment through youtube videos, while his sister Tina coordinated the promotional materials, social media advertising and press releases. The two of them enticed public investors to invest into the coin using modern day social media marketing tactics for their own personal financial gain. 

Coming from the SEC’s news release, Associate Director in the SEC’s Division of Enforcement, Melissa Hodgman, states “We allege that the Barksdales acted as modern-day snake-oil salesmen, using social media, promotional websites, and in-person roadshows to mislead retail investors for their own personal benefit.We will continue to vigorously pursue persons who sell securities in schemes to defraud the investing public no matter what label the promoters apply to their products.”

Source: How To Geek

Are there crypto scams? 

As the cryptocurrency space continues to expand, the SEC warns investors to be extremely cautious of ever evolving crypto scams and investment fraud. Digital currencies such as bitcoin are very much so unregulated, making it difficult to protect investors from financial loss. According to the federal trade commission (FTC) consumers in the United States lost more than $80 million to crypto scams between October 2019 to March 2020. Please always make sure you do due diligence in any new investment. 

How to avoid crypto scams?

It’s important to also remain cautious when handling any type of personal finances. Coin based scams can be prominent in the social media space. Here are some tips to avoid cryptocurrency scams

  • It’s important to take information with a grain of salt. Always investigate the claims being made around any type of investment, oftentimes, the claims that are made are too good to be true. 
  • Be aware of “pump and dump” influencers. These are people who encourage you to buy a coin and make false promises that it is about to skyrocket in price. In turn these influencers wait for their audience to invest enough money to pump the coin up and then they sell as soon as it spikes — leaving their audience with nothing when the coin then drops. 
  • Always Enable two-factor authentication whenever possible
  • Never share you wallet credentials or passwords
  • Do not trust anyone who is contacting you and asking for you to make payments in cryptocurrency. 
  • Always double check website links and URL’s to make sure they’re legitimate