The Commodity Futures Trading Commission (CFTC) offers temporary no-action relief to certain market participants. CFTC also warns investors against scammers, taking advantage of coronavirus news.
25 March, 2020 | AtoZ Markets – Trader and investor come with many biases and emotions that influence decision-making. Recent market losses due to the impact of COVID-19 may motivate some traders to recover their losses, while others may seek security. Fraudsters know this and design their presentations to appeal to these instincts. Fraudsters generally use major news events, such as the release of COVID-19, to add credibility to their scams or manipulate their emotions.
US CFTC Warns of Coronavirus Crypto Scams
The CFTC warned investors against fraudsters seeking to take advantage of the current market volatility triggered by fears related to the current pandemic. Specifically, the agency said it had observed a high number of fraudulent actors who use COVID-19 news events to manipulate investors. The CFTC added:
The common advice is, if it sounds too good to be true, it probably is.
Moreover, the CFTC further pointed out that coronavirus scammers don’t just scam people into investing their money in fake investment plans. According to the regulator, fraudsters also charge unnecessary fees for the collection and payment of taxes.
CFTC Issues a Series of Temporary Relief
CFTC grants temporary relief to several market players in response to the COVID-19 pandemic. It also announced that it had granted temporary no-action relief to a series of companies falling under its competence. The list includes:
- Futures commission merchants,
- Floor brokers,
- Retail foreign exchange dealers,
- Swap dealers,
- Swap execution facilities, and
- Designated contract markets
Market participants are temporarily exempt from specific compliance rules. It is difficult to achieve due to health measures such as remote work and social distancing.
Several governments have already warned the public of about the outbreak of crypto scams taking advantage of the widespread fears associated with COVID-19. Earlier AtoZMarkets reported, some online scammers pretending to be the World Health Organization (WHO) in an attempt to steal cryptocurrency donations to help fight the COVID-19 pandemic. The imitators ask potential donors to donate by sending Bitcoin directly to the indicated address. Imitators also use a false address to defraud people.
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