The Federal Trade Commission (FTC) defines cryptocurrency as a digital currency that is generally exchanged online without using an intermediary such as a bank. There are several well-known cryptocurrencies, such as Bitcoin and Ethereum, but many brands exist and continue to be created. Cryptocurrency is purchased through online exchange platforms and stored in a digital wallet. Service members may use cryptocurrency for a variety of reasons such as making quick payments, avoiding transaction fees charged by banks, providing anonymity of transactions, or holding it as an investment.
Cryptocurrency payments do not come with legal protections and are typically not reversible. Unlike accounts that are held at a bank, cryptocurrency accounts are not insured by the government. If a digital wallet company that stores cryptocurrency is hacked or goes out of business, the government has no obligation to help service members retrieve their lost funds.
According to the FTC, demanding payment by cryptocurrency, wire transfer, or gifts card is one sure sign of a scam. Additionally, thieves may present scams as investment or business opportunities.
The FTC suggests looking for the following scam warning signs:
- Scammers promise a profit.
- Scammers promise big payouts and guaranteed returns in a short amount of time.
- Scammers promise free money in either cash or cryptocurrency.
- Scammers do not provide details or explanations for their big claims.
See our recent webinar to learn more about cryptocurrency, including how it works, current research, and avoiding scams.
For additional content related to working with clients on personal financial issues, visit the MFLN Personal Finance Team. Free CEUs are available for AFCs, CPFCs, and CFLEs through our webinars.
Written By:
Barbara O'Neill
Edited By:
Selena Garrison
Program Coordinator
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