Florida Securities Attorney Laura Anthony Agrees with Two Federal Agencies: Cryptocurrencies are Game-Changing…and Risky

While distributed ledger technology (DLT) and cryptocurrencies like Bitcoin represent exciting developments for the securities and investment marketplace, Florida attorney Laura Anthony agrees with two federal agencies that they should be regarded by investors with caution and subjected to the same laws that govern traditional currencies.

Laura Anthony, West Palm Beach attorney and founding partner of Legal and Compliance, LLC, offers her insights into two 2018 statements concerning cryptocurrencies by the U.S. Securities and Exchange Commission (SEC) and U.S. Commodity Futures Trading Commission (CFTC).

In the February 6 Securities Law Blog, Ms. Anthony notes that technological financial advancements like cryptocurrencies tend to attract interest and excitement in the same way that can attract fraudsters, and she urges investors to ask hard questions and perform due diligence before engaging in virtual-currency markets.

Her comments are in reaction to recent SEC and CFTC statements and op-ed pieces in which both agencies promise to “continue to address violations and bring actions to stop and prevent fraud in the offer and sale of digital instruments.”

“Like the dot-com era, of the hundreds or thousands of companies popping up in this space, few will survive, and investments in those that do not will be lost,” she writes.

Cryptocurrency excitement and “extremely smart people” were evident at the recent North America Bitcoin Conference in Miami, which Ms. Anthony attended, but many other participants “were obviously trying to ride a boom, with nothing to offer,” she writes.

Many participants, she noted, “lacked a strong management team, technological know-how, engineers and programmers, a real business a real plan, or anything to support lasting value of the token issued in the ICO (initial coin offering) or being touted for future issuance.”

Noting both her personal fascination with cryptocurrency technology and investment in the DLT market, she nonetheless reminds investors to approach the market with caution, given that many cryptocurrencies are unregulated, originate from unrelated unregulated overseas markets, are “propped up with hundreds of thousands of marketing dollars,” or are marketed primarily for their potential increase in value on secondary (and unregulated) trading platforms.

“The message from the regulators remains consistent, cautioning investors about the high risks with investments in his new space,” she explains. She reiterates the SEC’s and CFTC’s commitment to “bring transparency and integrity to these markets and, importantly, to deter and prosecute fraud and abuse.”