With ‘get rich quick’ crypto scams on the rise, the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have issued a joint warning to investors. Both agencies are urging caution and strongly advising investors to do their due diligence before investing in the crypto space.

The alert was published Wednesday on the SEC’s Office of Investor Education and Advocacy website and warned investors about scams where the perpetrators set up fronts as cryptocurrency advisory and trading firms. The warning further explained:

“In some cases, the fraudsters claim to invest customers’ funds in proprietary crypto trading systems or in ‘mining’ farms. The fraudsters promise high guaranteed returns (for example, 20-50%) with little or no risk. […] After the investors make an investment, typically using a digital asset such as Bitcoin, the fraudsters in some cases stop communicating with the investors altogether.”

Although it may appear that an investor is earning the promised profits when he accesses his account on one of these websites, when he actually tries to withdraw those profits, he is asked to pay a fee in order to complete the withdrawal.

Of course, the withdrawal never gets completed and the investor loses his original investment and the additional fee, as well as the supposed profits.

Regulators highlight three Bitcoin HYIP schemes

To illustrate this cautionary tale, the agencies detailed a recent indictment brought against Onwuemerie Ogor Gift (aka Onwuemerie Ogor) and Kelvin Usifoh. The two men, both citizens of Nigeria, have each been indicted on one count of conspiracy to commit wire fraud, eleven counts of wire fraud, and one count of conspiracy to commit money laundering.

Gift and Usifoh allegedly “engaged in a scheme to defraud” in which they solicited bitcoin investments through several websites that promised investors 20 to 50 percent returns. Investors were assured that there was “zero risk” and that they could withdraw their profits instantly at any time.

The indictment goes on to describe how, when the victims attempted to withdraw their profits, they were told to deposit more bitcoins after which none of the funds were ever returned.

The three websites with which the defendants are allegedly affiliated are:

wealthcurrency.com

boomcurrency.com

merrycurrency.com

At press time, both wealthcurrency.com and boomcurrency.com have been taken down, though you can still find archived versions on Wayback Machine. Merrycurrency.com is still online and appears to be operational and even lists the latest completed “withdrawals” on their platform.

Watch out for these crypto investment ‘red flags’

To help crypto investors avoid these types of scams, the SEC and CFTC have published a list of warning signs that crypto investors should watch out for when evaluating any new investment opportunity:

‘guaranteed’ high rate of return

unsolicited offers

high pressure ‘invest NOW’ sales tactics

unlicensed sellers

complicated, jargon-filled documentation

Every investment carries risk, but there is “risk” and then there is “take all my money and let’s just get this over with.” Do your research. Don’t let them baffle you with bull. Contact your country’s securities regulator and verify the company’s credentials before you invest.