BCSC Investor Alert: Steer Clear of Cloud Token and WoToken Cryptocurrency “Smart Wallets”

British Columbia Securities Commission (BCSC) warns Canadians about Cloud Wallet and WoToken Wallet 'smart' cryptocurrency apps as possible pyramid ponzi schemes.

The British Columbia Securities Commission (BCSC) issued an investor alert on 2nd October, 2019 against two cryptocurrency smart wallet apps – WoToken Wallet and Cloud Token Wallet.

These platforms – both tied to Canada – purportedly store a person’s crypto-assets and earn money for the depositors. Much like robo-advisors, these wallets claim to provide wealth management services by using artificial intelligence to carry out high-frequency trades of crypto-assets on various exchanges to earn high returns that seem “too good to be true”. Once users make a deposit on the app, the automated trading is not under their control.

To get started on either of the apps, an investor needs to make a minimum deposit ranging between US $100 and US $1,000 in crypto-assets. WoToken Wallet claims to earn 6 to 20 per cent monthly returns for its users while CloudToken Wallet’s claim is somewhere around 6 to 15 percent.

Besides the exceptional return, these apps also claim to offer pyramid-scheme like payments to people who bring others in to use the app. These promises of referral income and unnaturally high returns may have cautioned the BCSC, instigating it to release the warning.

If a depositor’s recruit convinces more people to use the wallet then the depositor receives additional bonuses that are handed out in crypto-assets, which are unique to the two wallets. These crypto-assets can later be converted into more conventional cryptocurrencies such as bitcoin or ether.

BCSC director of enforcement, Doug Muir has said that the two apps have been live for a year now and that he is unaware of the number of users each app has or whether there are more apps that pitch a similar product. In the press release, Muir said,

“Big promises and pyramid-like payouts are both classic warning signs of risky investments. We urge everyone to approach these apps with extreme caution.”

A spokesperson from Cloud Wallet claims that the app is not a ponzi scheme. To register themselves on the Apple Store, the app had to establish its legitimacy by passing a multi-step approval process.

Till then, the BCSC is urging caution from investors who trade in crypto-assets through trading platforms. There is no crypto-asset trading platform that is recognized as an exchange or otherwise authorized as a marketplace or dealer in Canada.

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Sakshi Jain
Sakshi Jain
Insatiably curious and inappropriately funny, Sakshi lives by the words "Create more than you consume". An ex-employee of Goldman Sachs, Sakshi understands the nuances of all things finance. Now a content writer in the space of fintech, she wants to be both a witness and a teller of a revolution that changed the world we live in and in the process would want to be able to leave behind a legacy however small, however unknown but significant nonetheless.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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