The Australian securities watchdog has warned locals against using their retirement savings to invest in digital currencies without fully understanding the risks involved.
In its warning, the Australian Securities and Investments Commission (ASIC) claimed that fraudsters are targeting the trustees of self-managed super funds (SMSFs) and getting them into sketchy digital currency products.
SMSFs are private super funds popular in Australia in which investors get to choose the investments and the insurance. They are an alternative to the more popular retail and industry superannuation funds and allow investors to target high-return investments. SMSF funds, which can have no more than six members, are the only way in which Aussies can add digital currencies to their portfolios.
“ASIC is reminding superannuation fund members it is best practice to seek advice from a licensed financial adviser before agreeing to transfer superannuation out of a regulated fund into an SMSF,” the watchdog stated.
According to the ASIC, trustees of these SMSF funds are being targeted to invest in digital currencies. While they are not outlawed in Australia, the watchdog warned that digital currencies are risky investments in which investors can lose all their money.
Fraudsters targeting Aussie SMSF fund trustees have been relying on social media to reach their targets, the ASIC claims. “Do not rely on social media ads or online contact from someone promoting an ‘investment opportunity,'” it advises.
“Be wary of people’ cold calling’, text messaging, or emailing you with a recommendation to transfer your super to an SMSF, or invest in crypto-assets via your SMSF,” it added.
The watchdog also revealed that it cracked down on a digital currency company that was employing these tactics in November last year. Known as A One Multi Services and located in Queensland, it allegedly channeled over AUD $2.4 million (US$1.73 million) into buying digital assets. The founders promised 20% in annual returns to the investors if they loaned them the money from their SMSF.
Watch: CoinGeek New York panel, Investing in Blockchain Ventures
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
