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Commodity Futures Trading Commission issues advisory for virtual currency pump-and-dump schemes

Richard Rosenfeld (Mayer Brown LLP, New York, USA)
Alex Lakatos (Mayer Brown LLP, Washington DC, USA)
David Beam (Mayer Brown LLP, Washington DC, USA)
Jennifer Carlson (Mayer Brown LLP, Palo Alto, California, USA)
Nina Flax (Mayer Brown LLP, Palo Alto, California, USA)
Philip Niehoff (Mayer Brown LLP, Chicago, Illinois, USA)
Matthew Bisanz (Mayer Brown LLP, Washington DC, USA)
Nicholas McCoy (Mayer Brown LLP, Washington DC, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Publication date: 3 September 2018

Abstract

Purpose

The purpose of this paper is to explain innocent actors in the virtual currency space (e.g. virtual currency exchanges, financial institutions, social media platforms) and how to avoid potential exposure because of the misconduct of users or customers.

Design/methodology/approach

Explains how pump-and-dump securities and commodities fraud schemes work, explains the Commodity Futures Trading Commission’s warning to consumers about how to avoid being victimized by schemers running pump-and-dump schemes in the virtual currency space, explains how innocent well-meaning actors may – because of misconduct by their customers or users – be at risk of exposure to victims of pump-and-dump schemes and provides practical guidance for avoiding these dangers and remediating problems.

Findings

Market participants must protect their reputations, and they cannot rely on the government to do so for them. Moreover, because investors who fall prey to fraud may be unable to recover from fraudsters, such investors may seek to recover from innocent market participants. Accordingly, market participants should take precautionary measures to avoid being used by fraudsters.

Originality/value

Practical guidance from experienced securities and financial services litigators.

Keywords

Citation

Rosenfeld, R., Lakatos, A., Beam, D., Carlson, J., Flax, N., Niehoff, P., Bisanz, M. and McCoy, N. (2018), "Commodity Futures Trading Commission issues advisory for virtual currency pump-and-dump schemes", Journal of Investment Compliance, Vol. 19 No. 3, pp. 42-44. https://doi.org/10.1108/JOIC-04-2018-0033

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Publisher

:

Emerald Publishing Limited

Copyright © 2018, Mayer Brown.

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