The Washington State Department of Financial Institutions (DFI) reminds Washington investors to diversify investments and be informed when investing in largely unregulated products like cryptocurrency.
Recent bankruptcies of cryptocurrency companies have revealed that consumers holding accounts at these types of companies may be considered unsecured creditors.
Some of these companies are registered and licensed with DFI. We have opened multiple investigations in connection with cryptocurrency companies and may take enforcement action in the event that we uncover violations of state law.
Today, more than ever, it’s important for investors to be fully aware of the risks involved with their investments. No investment is free of risk – this past week's events shine a bright light on the potential for risk within cryptocurrency investments.
Tips for Investors
- Understand what you’re investing in:
- Research the company prior to investing – know their performance history.
- Verify whether a company is licensed and regulated in the State of Washington.
- Check the terms and conditions of the account agreement to make sure you understand your rights under the terms of the agreement.
- This may mean scrolling through many pages of “fine print” and/or requesting additional information directly from the company to fully understand the risks.
- Never invest more than you can afford to lose and maintain a diversified investment portfolio to help weather the market ups and downs.
- Understand there are risks:
- Contact the company immediately if you have concerns.
- Investors also should be aware that funds held on cryptocurrency trading platforms are likely not insured by the FDIC. Recently, the FDIC issued a Fact Sheet clarifying when an account is considered FDIC insured.
- If you feel you’ve been defrauded, file a complaint.