At the CFTC, we protect you the customer by bringing actions to enforce the law, but we cannot catch every illegal act in the crypto space.  Even when we do, it may be too late to get your money or crypto back.

You can arm yourself against illegal actions by checking free tools before you invest with a friend or someone who holds themselves out as a crypto expert or offers investment advice, particularly on the internet or through social media.

First, check to see if they are a registered investment professional.

Legally registered brokers and advisors are required to have customer protections.  You can use free tools to check if the person is an advisor or broker, and that the company they work at, are registered with the CFTC/National Futures Association (NFA), Financial Industry Regulatory Authority (FINRA), or the Securities and Exchange Commission (SEC).  If they are not registered, they may be operating illegally.

• NFA’s BASIC for CFTC/NFA registered advisors and the company they work at (https://www.nfa.futures.org/BasicNet/basic-search-landing.aspx);
• FINRA’s BrokerCheck for registered brokers and dealers and the company they work at (https://brokercheck.finra.org/);
• SEC’s Investment Adviser Search for registered investment advisers or the company they work at (https://adviserinfo.sec.gov/).

Second, don’t believe everything promised. 

If someone claims that they will make you wild profits that seem too good to be true, they often are.  Ask for written proof of the profits they have made—and don’t accept a screen shot.  Many defendants in our enforcement cases provided fake screen shots to their victims.  Also ask about whether they have experienced losses.

Third, notify the government if you think you may be a victim.

If you try to withdraw your funds or crypto, and keep getting delays or excuses, or if you think you have been scammed, you can contact the CFTC and SEC to file a tip/complaint.

• CFTC: https://forms.cftc.gov/Forms/Complaint/Screen1
• SEC: https://www.sec.gov/tcr

Cautionary Tale: The Jacob Orvidas case is a cautionary tale.  The defendant fraudulently solicited $2.27 million in customer Bitcoin that he promised to trade on a leveraged basis.  He illegally operated a crypto fund that was required to be registered with the CFTC, but was not.  He touted his crypto trading skills, lied, and made empty promises of significant profits.  For example, the defendant told one pool participant that one client invested $100,000 worth of Bitcoin and cashed out $2.7 million.  Instead, he lost nearly all of the customers funds, which he tried to cover up.  He sent fake screen shots of past profits.  He told customers that they had made a 17% profit, but kept up with excuses as to why customers could not cash out those profits.  To prevent him from victimizing more people, the CFTC is banning him for 10 years from trading and registering with the CFTC.  He formally admitted to his illegal actions in the CFTC case,[1] and has been ordered to repay the more than $2 million to victims and a $500,000 penalty.  However, it is not known whether there will be funds to repay customers given his losses.