Blockchain Working Group Formed By US Federal Trade Commission
The Federal Trade Commission (FTC) seems to be on move against people using cryptocurrencies to break the law. The organization has announced last week that it was making a lawsuit against four people who Promoted “Chain Referral Schemes”, also known as multi-level marketing schemes of Ponzi Schemes.
While this is not news, as Ponzi schemes are illegal in the United States, what is different is that now the FTC is prosecuting cases of chain referral schemes made with cryptocurrencies. To aid in this new investigations, the company decided to create the FTC Blockchain Working Group.
Cryptocurrencies have been a hot topic for the FTC since last year when the price of Bitcoin skyrocketed and the blockchain technology became mainstream for the first time. By having the potential of anonymity, scammers use cryptocurrencies as a way to receive money illegally without being traced or at least difficulting the work of the authorities to arrest them.
Also, the FTC claims that many scammers use the mystery surrounding Bitcoin and other cryptocurrencies to lure people to invest in them because they do not know how they work yet. The FTC states that criminals often dress up old scams with new buzz words so they can continue to fool people without having to change their actual scheme.
How The Cryptocurrencies Will Affect The FTC’s Work
Although some schemes continue to be the same, many new ones are emerging. The FTC recently stated that this new technology will affect its work gradually because the organization will have to develop new ways to tackle the strategies that the criminals are using on people.
Some cases that criminals are already using cryptocurrencies are, for instances, in ransomware cases, in which the user who was attacked has to pay in Bitcoin to get the files of his computer back. Other cases are new schemes which are popping up. The FTC cited the case of Butterfly Labs, a company that has allegedly charged consumers for Bitcoin mining machines but did not deliver them at all.
Other cases involve companies offering mobile apps that mined the user’s phone without its consent and token sales, the famous ICOs, which are prohibited in the United States since 2017 because tokens are understood to be like securities and only accredited investors can invest in this type of investment. Cryptocurrencies are also being used for money laundering, hiding assets, etc.
Finally, other companies are using this new technology to disrupt old markets and take them. Thus, they require regulatory practice from the FTC to avoid monopolies after the markets re-establish themselves.
The Future Of FTC Blockchain Working Group
The Blockchain Working Group, the FTC states, has three main purposes: to build on the FTC staff expertise in the blockchain and cryptocurrency market and to use the aid of external experts; to facilitate the internal communication and the future coordination required to enforce the actions that will punish criminals using blockchain technology; and to serve as an internal space in which the people will be able to access the impact of the FTC’s mission and of this new market.
It is safe to say that the FTC will be getting a lot harder on cryptocurrency crimes, which can definitely be a good thing if you are afraid to be targeted by criminals and not so good if you are interested in Initial Coin Offerings, which are illegal in the country.