Residents across the state seeking investment opportunities are being cautioned about where they place their money.
The Oregon Division of Financial Regulation (DFR) is urging Oregon investors to diversify investments and be informed of the risks in investing in largely unregulated products such as cryptocurrency.
Some of these financial product offerings are registered and licensed with DFR as money transmitters or securities offerings. The division has investigated several cryptocurrency companies and continues to monitor the market.
According to an online broad 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 traded for goods and services, transferred from one person to another, or held for investment purposes.
“It is important to know the risks involved with cryptocurrency or any investment opportunities,” DFR Administrator TK Keen said. “No investment opportunities are risk free, and you should always do your homework on where you are sending your money. This is especially true when cryptocurrency is involved.”
The bankruptcy of FTX, the third largest cryptocurrency exchange in the world, which left approximately 1 million customers and investors facing total losses in the billions, should serve as a warning to anyone investing in cryptocurrency.
“Investing in cryptocurrency is extremely risky given what’s going on right now,” Keen said. “It’s important to not invest more than you can afford to lose or put all of your assets in one bucket.”
Cryptocurrency accounts are not generally 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 it comes to digital currency and nonfungible tokens (NFTs), which are often linked to digital works of art, photos, or videos:
Carefully research these types of investments. Many of these “investment opportunities” are speculative in nature. Before engaging in a transaction, make sure that you understand what you are purchasing, the value of the item purchased, the reason for the valuation, and how easy it is to sell the investment if you want to get out your money.
Use a digital currency exchange that is licensed with the state to transmit cryptocurrency to someone else. Oregon law requires companies that transfer digital currency from one person to another to be licensed as money transmitters. Digital currency exchange companies that purchase or sell cryptocurrency from their own inventories are not required to be licensed.
Do not spend money you need. The volatility of the digital currency and NFT markets means that you should not purchase cryptocurrency with money that is needed for essential purposes such as food, housing, and gas.
In an earlier advisory in October, the DFR warned of several online scams that are couched as “education” and “guidance” to investors in what are actually steering schemes.
“These schemes make numerous misrepresentations about the investment and its rate of return through TikTok and Discord, making it difficult to later track down these misrepresentations and the individuals involved,” the DFR stated in a release. “The investment offerings are often targeted at people who have recently lost money on investments in cryptocurrency or stocks.”
For more information about these platforms, or if you believe you may have been defrauded, contact the division’s advocates at 866-814-9710 (toll-free).