AFSA Warns Investors on Six Red Flags of ICO Scams

AFSA Warns Investors on Six Red Flags of ICO Scams

TIRANA, July 3

The Albanian Financial Supervisory Authority (AFSA) warns investors on the risk of possible ISOs, Initial Coin Offering, that are used to fund scams. AFSA highlighted in its latest press release that investors have to be careful due to the fact that ICOs are not subject to regulation and therefore there is no supervision.

“These types of instruments along with recent developments in financial technology can be used to promote or encourage the development of fraudulent Ponzi schemes. Under these conditions, the investor does not enjoy the same level of protection as in the case of financial products provided by licensed and supervised entities,” AFSA says in its press release.
Moreover, the institution informs that it made a description of Ponzi schemes.
“A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk,” AFSA says.

Further on, it ranks the six red flags of scam ICOs:

  • They declare high profits without mentioning the risk of investment.
  • They declare a steady and continuous profit
  • They offer commissions or incentives to existing investors to attract more people in the scheme
  • Such strategies consist of complex investment strategies
  • They don’t provide information, documents or whitepaper
  • Difficulty receiving payments and promises for higher profit in case of reinvestment

News Source: AMF


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