The state Department of Financial Institutions issued a warning to investors to beware of marijuana investments, binary options and digital currency.
Marijuana investments, the department said in a release this week, “could be particularly susceptible to scams.” The emerging cannabis market “is highly volatile and only semi-legitimate because regulations for medicinal and recreational use vary greatly between states and jurisdictions.” Investors, the department said, “may have difficulty recouping their money.”
Binary options, a simplified options contract, “looks more like online gambling than a traditional security or investment,” the department said. The options, for example, offer an investor a chance to bet whether a certain stock will go up within a given period. “The amount of Internet-based trading platforms has surged in recent years. Many of these platforms are unregulated or are completely illegal. Binary options contracts are an attractive strategy for scammers because they target unsophisticated investors with a simple-to-understand ‘investment opportunity.’”
Digital currency (think Bitcoin) is accepted by a growing number of brand-name retailers, the department said. This could mean increased visibility, and increased potential for scams. Investors should be aware that digital currency values “fluctuate wildly” and that “different countries and jurisdictions have little uniformity” on regulations, thus leading scammers to “take advantage of the confusion and contradictions to misinform potential investors.” Digital currency, difficult to trace, is also vulnerable to cyberattacks.
So, the department said, “before making any decisions with your money, ask questions, and do your homework.”