Investor Alert: Crypto-asset "smart wallets"
VANCOUVER, Oct. 2, 2019 /CNW/ - The British Columbia Securities Commission (BCSC) is alerting investors about "smart wallet" apps that purportedly store a person's crypto-assets and earn money for depositors.
The apps promise to reward users through automated trading of crypto-assets on various exchanges. If users deposit a certain amount, they can activate artificial intelligence software that is supposed to find and execute high-frequency crypto-asset trades. The purported trading is not controlled by the app's users.
One app, WoToken Wallet, claims that users will realize earnings of six to 20 per cent monthly by activating the trading software. Another app, Cloud Wallet, says users will earn six to 15 per cent monthly in the same way.
Users are told they will receive bonus payments by persuading other people to use the wallet; the payments depend on how much those recruits earn from the crypto-asset trading software. If a depositor's recruits persuade others to use the wallet and they, too, reap trading profits, the depositor supposedly receives additional bonuses.
"These apps' claims of big payouts from some kind of automated crypto-asset trading appear too good to be true," said Doug Muir, the BCSC's Director of Enforcement. "The apps also resemble a pyramid scheme, in which investors are promised earnings if they get others to join in. Big promises and pyramid-like payouts are both classic warning signs of risky investments. We urge everyone to approach these apps with extreme caution."
Users are required to make a minimum deposit of US$100 to US$1,000 in crypto-assets. The bonuses are paid out in a crypto-asset that is particular to each app, which can supposedly be converted into more commonly-traded crypto-assets like bitcoin or ether, and then into conventional currency.
Cloud Wallet is available on Apple's App Store and Google Play. WoToken Wallet can only be downloaded from a website unconnected to the App Store and Google Play.
WoToken Limited, the company behind the WoToken Wallet, is based in the British Virgin Islands. WoToken Wallet's Facebook page also mentions a connection to WO Data Group Ltd., which was recently registered in B.C., and WO Data Group Limited, which was recently registered in Colorado.
The company behind Cloud Wallet, Cloud Technology & Investments Pty Ltd., is registered in Australia. One of the people promoting Cloud Wallet in online forums lives in Canada.
The BCSC is warning the public about using these apps. In addition, the BCSC and other Canadian securities regulators urge caution when buying crypto-assets through trading platforms because no crypto-asset trading platforms are recognized as an exchange or otherwise authorized as a marketplace or dealer in Canada.
About the British Columbia Securities Commission (www.bcsc.bc.ca)
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
- A securities market that is fair and warrants public confidence
- A dynamic and competitive securities industry that provides investment opportunities and access to capital
Learn how to protect yourself and become a more informed investor at www.investright.org
SOURCE British Columbia Securities Commission
Media Contact: Brian Kladko, 604-899-6713; Public inquiries: 604-899-6854 or 1-800-373-6393 (toll free), [email protected]
Share this article