BCSC issues warning about crypto apps

By James Langton | October 2, 2019 | Last updated on October 2, 2019
1 min read
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Regulators are sounding the alarm about an emerging new threat to investors — apps that promise easy money from automated crypto asset trading.

The British Columbia Securities Commission (BCSC) issued an alert on Wednesday about so-called “smart wallet” apps that purport to generate returns through automated high-frequency trading of crypto assets.

The BCSC said that one of these apps claims investors will generate returns of between 6% and 20% per month through its automated trading, while another says users can expect a monthly payoff of 6% to 15%.

Additionally, investors are promised bonuses for recruiting new users to the apps.

“These apps’ claims of big payouts from some kind of automated crypto-asset trading appear too good to be true,” Doug Muir, director of enforcement at the BCSC, said in a statement.

“The apps also resemble a pyramid scheme, in which investors are promised earnings if they get others to join in,” he said.

“Big promises and pyramid-like payouts are both classic warning signs of risky investments. We urge everyone to approach these apps with extreme caution,” he added.

A couple of these apps have connections to Canada, the BCSC reported, noting that one of them is connected to a company in B.C., while another is being promoted in online forums by a Canadian resident.

The BCSC noted that Canadian securities regulators recommend that investors remain cautious about trading in crypto-assets generally, as there aren’t any crypto-asset trading platforms that are registered as an exchange, a marketplace or a dealer in Canada.

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.