Nov. 24 – Residents across the state looking for investment opportunities are being warned about where they put their money.
The Oregon Division of Financial Regulation (DFR) urges Oregon investors to diversify their investments and educate themselves about the risks of investing in largely unregulated products like cryptocurrencies.
Some of these financial product offerings are registered and licensed with DFR as money transmitters or securities offerings. The department has investigated several cryptocurrency companies and continues to monitor the market.
According to a broad online definition, a cryptocurrency is virtual or digital money that takes the form of tokens or coins.
Cryptocurrencies are digital assets that have no government backing. They are typically purchased, used, stored, and traded electronically through digital currency exchanges. They can be exchanged for goods and services, transferred from one person to another, or held for investment purposes.
“It’s important to understand the risks associated with cryptocurrency or investment opportunities,” said DFR Administrator TK Keen. “No investment opportunity is risk-free, and you should always do your homework on where you send your money. This is especially true when it comes to cryptocurrency.”
The bankruptcy of FTX, the third-largest cryptocurrency exchange in the world, leaving around 1 million customers and investors in total billions of dollars in losses, should serve as a warning to anyone investing in cryptocurrency.
“Given what’s happening right now, investing in cryptocurrency is extremely risky,” Keen said. “It’s important not to invest more than you can afford to lose or put your entire fortune in one bucket.”
Cryptocurrency accounts are generally not insured by the FDIC, which recently issued a fact sheet clarifying when an account is considered insured.
DFR encourages Oregonians to follow these tips when dealing with digital currencies and non-fungible tokens (NFTs), which are often linked to digital artwork, photos, or videos:
Research these types of investments carefully. Many of these “investment opportunities” are speculative in nature. Before making a transaction, make sure you understand what you are buying, the value of the item you are buying, the reason for the valuation and how easy it is to sell the investment if you want to get your money back.
Use a digital currency exchange licensed by the state to transfer cryptocurrency to someone else. Oregon law requires companies that transfer digital currency from one person to another to be licensed as a money transmitter. Digital currency exchange companies that buy or sell cryptocurrency from their own holdings do not need to be licensed.
Don’t spend money you need. The volatility of the digital currency and NFT markets means you shouldn’t buy cryptocurrency with money needed for essential purposes like food, housing, and gas.
In an earlier advisory in October, DFR warned of several online scams designed to provide “education” and “guidance” to investors regarding actual governance systems.
“These systems make numerous misrepresentations about the investment and its return through TikTok and Discord, which makes it difficult to later track down these misrepresentations and the people involved,” DFR explained in a press release. “The investment offerings are often aimed at people who have recently lost money investing in cryptocurrency or stocks.”
For more information about these platforms or if you believe you have been scammed, contact the department’s attorneys at 866-814-9710 (toll-free).