CFTC Warns of Increase in Fraud by Unregistered Brokers

The CFTC warned of an increase in fraud targeting individuals who recently lost their jobs due to the coronavirus pandemic.

According to the CFTC, the scams involve unregistered firms that (i) offer binary options, foreign exchange programs and cryptocurrencies, and (ii) communicate through social media and messaging apps.

The CFTC cautioned investors against solicitations by firms that:

• can only be contacted online and do not have physical addresses;

• only communicate through messaging apps;

• request payments in Bitcoins or other digital assets;

• make unrealistic promises, such as high returns in a short amount of time;

• are not registered with the CFTC; or

• operate outside of the United States.

The CFTC reminded investors that risks, fees and commissions should be disclosed before accounts are opened, and that payments should not be required in order to withdraw from an account.