The recent dip in cryptocurrency values seems to have done little to curb scams targeting retail investors.
The Australian Securities and Investments Commission has confirmed that it has closed several initial "coin offerings" (ICOs) that were either illegal or using misleading statements in their marketing.
ASIC also recently stopped issuing a Product Disclosure Statement (PDS) for a crypto-asset managed investment scheme.
Since April, in five separate issues, the regulator has acted successfully to prevent ICOs from raising capital without investor protection.
"If you raise funds from the public, you have important legal obligations, it's the legal substance of your offer, not what is called, which is important" Commissioner ASIC John Price said.
"You should not simply assume that the use of an ICO structure allows you to ignore the key protections for the investing public and you should always ensure that the disclosure of your offer is complete and accurate."
The scams are not new and ASIC has identified a number of problems that continue to show up.
- Use of misleading or misleading statements in sales and marketing materials
- Managing an unregistered managed investment system
- Do not hold a license for Australian financial services.
Last week, ASIC issued a final order arrest on a PDS issued by Investors Exchange Limited for the shares of the New Dawn Fund.
The Fund was proposing to invest in a range of cryptocurrency assets.
ASIC has previously warned that while ICOs may look similar to initial public offering (IPO) on the stock market, they are very different and lack the same level of pre-release scrutiny.
"They usually do not offer any legal rights and protection, nor claims on underlying assets. The offerings of shares in an IPO offer legal rights and protections," ASIC said.
"ICOs use the Internet to raise funds, but they are not the same as crowdsourcing funds that are regulated by Australian law and offer basic investor protection."
The ASIC document described ICOs as speculative investments to high risk and largely experimental.
"As a result, some projects may take years before they become commercially viable, if at all. A large number of ICOs fail or do not increase in value," he said.
Wild cryptocurrency race
Even the most consolidated cryptocurrency, Bitcoin, has been a challenge for investors.
In the last 12 months it has risen from around $ US5,000 ($ 6,888) to almost $ 27,557 and then collapsed back down.
Yesterday, Bitcoin experienced a flash-crash and a wild 10% swing from peak to empty.
It has become a matter of playing short sellers ahead of a decision on the future of an electronically funded Bitcoin fund traded (ETF).
The US Security and Exchange Commission will make a decision on the opportunity to grant approval to the ETF this month, having previously rejected similar proposals due to the volatility of cryptocurrencies and the potential for price manipulation.