The Albanian FSA warns investors to be cautious when investing in virtual Initial Coin Offerings (ICO’s) Issuance!
Recently, many companies at the European and global level are raising public money using a new mechanism, such as the issuance of virtual Initial Coin Offerings (ICO’s). Based on this mechanism or this business financing new alternative, mainly for new projects, investors in exchange of money or in exchange of other virtual currencies such as Bitcoin and Ether, receive from the issuing companies a virtual currency which is known as “token”, as specified by the company or the relevant company or project, which represents the participation in the revenues of the company which have not yet been realized.
The issuance of virtual Initial Coin Offering (ICO) is not subject to any type of regulation and subsequently is not subject to any type of supervision. Under these circumstances, the investor does not benefit the same level of protection compared to the products offered by licensed and supervised entities.
Issuance of securities as a way to increase business funding, either through the initial public offering (IPO) or private offering is regulated as pursuant to Law no. 9879, dated 21.02.2008 “On Securities”, as well as based on by-laws issued by AFSA.
Albanian FSA draws the attention of investors on the potential risks that may arise when investing in an ICO outside the territory of the Republic of Albania.
Why do you need to be cautious when investing in virtual Initial Coin Offerings (ICOs)?
- Investing in virtual Initial Coin Offering (ICO) may result in a fraudulent scheme and as such you may lose all your money;
- Firms which are currently issuing virtual Initial Coin Offerings (ICO) are mainly Startup firms and as such they may result to be unsuccessful;
- Investing bears high risk of liquidity, since investors who purchase the “token” coin may not be able to sell it in case they need money;
- “Token” coins purchased through ICO bear strong price fluctuations;
- Issuance of virtual Initial Coin Offerings may serve as money laundering schemes and as a result investors may face significant legal consequences;
- Investment is related to a lack of transparency due to insufficient and unaudited information provided by audit companies;
- Virtual Initial Coin Offerings Market (ICO) may be manipulated due to the spread of fake news, which might have an impact on the price of the virtual currency that may be easily manipulated.
The Albanian Financial Supervisory Authority informs investors that in the Republic of Albania there does not exist any company licensed by the Authority to issue virtual Initial Coin Offerings (ICOs). However, it is not excluded the possibility of existence of fraudulent schemes which might attract investors to invest in an ICO outside the territory of the Republic of Albania. In such cases you should be cautious, as the Albanian Financial Supervisory Authority has not licensed any agent to promote such activities.