Cryptocurrency scams now rampant says SEC

Warren De Guzman, ABS-CBN News

Posted at Apr 18 2018 06:14 PM

MANILA - The Securities and Exchange Commission on Wednesday warned that internet-based bitcoin and cryptocurrency ponzi schemes are now running rampant.

In its latest advisory warning the public against investing in 14 new unregistered cryptocurrency schemes run by the following entities:

1) NewG 
2) Smart Capital 
3) Gener8X 
4) Paid2Prosper 
5) CMT (Coins and Mining Trading) 
7) TradeConnect 
8) IronTrading (Team Bangon) 
9) ExpertTrading 
10) OneCash 
11) Lucky Coins 
12) Miner’s Investment Group 
13) Digital Coin Trading 
14) All Pal for All Seasons 

The SEC also advised the public that cryptocurrency scams are characterized by the following: 

1. Their entities are not SEC-registered;
2. Their investment offers are not SEC-registered;
3. They claim having investments in cryptocurrencies to earn profits;
4. They offer or guarantee a huge profit in a very short period;
5. They often utilize a binary network (i.e. upline and downline) to earn commissions;
6. They operate without paper trails (i.e. contracts, receipts);
7. They promise little or no financial risk;
8. They impose provisions for a lock-up period where an investor cannot touch the investment (i.e. 60 days);
9. They assure pay-off of investments in a short time;
10. They use high-pressure methods to convince investors to reinvest their earnings;
11. Information about their principal office, address, founders, directors or officers are unknown; and
12. Their orientation seminars are conducted informally.

The SEC has issued multiple advisories to the public warning against cryptocurrency investments, the most well known being the KROPS Initial Coin Offering of Joseph Calata, owner of the delisted agribusiness Calata Corporation.

The SEC said that while it has not yet issued guidelines on cryptocurrencies, it still has jurisdiction over these because they fit the description of securities under the securities regulation code. 

The agency also recently warned the public against investing in "cloud mining contracts," which supposedly offer investors returns in exchange for the lease of cryptocurrency mining tools.

The BSP has sanctioned the use of cryptocurrencies in the Philippines, but only for remittance transactions. 

Only two virtual currency exchanges have been registered with the BSP, and