SEC Claims Cannabis and Cryptocurrencies Have a Lot in Common Latest Investor Warning

SEC Says that Cannabis and Cryptocurrencies Have a Lot in Common

September has been a calm market for virtual currencies. However, cannabis stocks skyrocketed and called the attention of several investors. Back on September 19, the cannabis company known as Tilray (TLRY) registered an important increase in its price. And indeed, the market capitalization of that company was even larger than the one of American Airlines and Chipotle.

However, once it reached its all-time high close to $300 dollars, Tilray’s price experienced an important drop. Even after this correction, the market capitalization of the company remains much higher than what it was just in July.

But Tilray is not the only cannabis company that has experienced a sudden increase in its price. Aurora (ACBFF) and Canopy Growth (CGC) have also registered important price surge. Investors are now searching for the next cannabis company to place their investments.

And indeed, there are some analysts that make some relations between these price increases in the cannabis industry with what happened to cryptocurrencies at the end of 2017 and the beginning of 2018.

At the same time, there is regulatory uncertainty in the market. Regulatory agencies do not know how to treat virtual currencies. The same happens with regulations regarding cannabis companies and the industry.

According to the SEC Office of Investor Education and Advocacy’s chief counsel Owen Donley III, there is a high level of fraud on both industries. For Donley, there are several fraudulent schemes in the cryptocurrency world, and the same happens with cannabis companies and projects.

ICOs for example, do promise several products and services that seem amazing, but in the end, they do not have facts and real developments to prove what they say. The marijuana industry has similar projects that aim at delivering incredible results, but just a few of them seem plausible.

The SEC has also explained that not all companies launch with the intention to scam investors. This is why it is very important for regulatory agencies to regulate the market and allow the ecosystem to smoothly grow.