The CFTC issued an advisory warning investors against “IRS approved” or “IRA approved” virtual currency retirement accounts.
Virtual currency is a digital representation of monetary value traded on the internet or other online platforms, like Bitcoin or Ethereum. Their prices are highly volatile, and storing them in an individual retirement account (IRA) does not help reduce this unpredictability. Especially during tax time, businesses may try to promote these erratic cryptocurrencies with false claims. The CFTC and the IRS do not endorse any investments.
IRAs take many different forms, from the traditional tax-deferred IRAs, to Roth IRAs, to self-directed IRAs. False advertisements tend to cater to self-directed IRAs. This type of IRA offers more versatility because it permits a diverse set of investments such as cryptocurrency and precious metals. Yet, dealing with virtual currencies comes with special risks including, but not limited to:
- Irregular performance
- Unregulated cash markets
- Increased danger of hacking activity
- Lack of safeguarding (in the case that digital assets are lost, there may be not alternative to retrieve them)
Examples of Virtual Currency Fraud
- Pump-and-dump schemes or price manipulation
- Wash trading (buying through one broker and selling through another)
- Marketing toward retail customers led by unregistered individuals
Blowing the Whistle on Virtual Currency Fraud
- If an individual has original information regarding cryptocurrency fraud that fits certain criteria, whistleblowers may be eligible for rewards from the CFTC and the SEC.
- Kohn, Kohn & Colapinto advocates for whistleblowers against virtual currency fraud involving securities and commodities, investment, and money laundering matters.
Whistleblowers seeking legal advice may contact Kohn, Kohn & Colapinto for a consultation.
