SEC warns against online scams

SEC Chair Atty. Teresita Herbosa Photo bu Noy Morcoso/Inquirer.net

As investment scammers increasingly use the digital space to hunt for preys, the Securities and Exchange Commission warned the public against 14 unregistered entities that solicit investments through social media.

The SEC likewise warned of rampant internet-based bitcoin and cryptocurrency Ponzi schemes, referring to fraudulent operations where investors are enticed to place money due to hefty returns. However, older investors only earn as new investors put in money, rather than generating dividends through legitimate business or trading operations.

“This investment scheme ordinarily collapses as fast as they are created while leaving its investors behind and unable to recoup their investments,” the SEC said.

Following an investigation by its enforcement and investor protection department (EIPD), the SEC raised the red flag on these unregistered entities.

1) NewG
2) Smart Capital
3) Gener8X
4) Paid2Prosper
5) CMT (Coins and Mining Trading)
6) PSO (PSOPOWER Apps)
7) TradeConnect
8) IronTrading (Team Bangon)
9) ExpertTrading
10) OneCash
11) Lucky Coins
12) Miner’s Investment Group
13) Digital Coin Trading
14) All Pal for All Seasons

The SEC said these entities or their representations would usually offer their investment contracts in their corresponding Facebook pages or secret FaceBook groups and chatroom. They offer unrealistic return on investments ranging from 10 percent to 200 percent per month.

Investors are then to pay their initial investments by depositing their money to a specific bank account, Coins.Ph account, GCash, through a money remittance company and through face-to-face payments with one of the entity’s agents. The investor will be asked to send through private message a copy of the proof of deposit to the offeror who shall send his confirmation after validation. Payouts are delivered using the same methods as used when collecting the placements.

“They usually claim that they invest their funds in bitcoin and other cryptocurrencies to justify their earning capacity,” the SEC said.

“The public is hereby warned that such investment schemes, whether with the use of money or cryptocurrencies, are considered as securities subject to the regulatory authority of this Commission. The recruitment of investor members under the guise of sponsoring a person into the system is likewise considered a form of investment solicitation or a sale of securities,” the SEC said.

The SEC reminded the public that any offering or sale of securities to the public without a permit or license from the SEC is punishable under the securities law, along with those who act as salesmen, brokers, dealers of agents. Violators can be fined by a maximum of P5 million or jailed for 21 years, or both.

Meanwhile, the SEC urged the public to guard against Ponzi scheme operators, which can be characterized by the following:

1. Their entities are not SEC-registered;
2. Their investment offers are not SEC-registered;
3. They claim having investments in cryptocurrencies to earn profits;
4. They offer or guarantee a huge profit in a very short period;
5. They often utilize a binary network (i.e. upline and downline) to earn commissions;
6. They operate without paper trails (i.e. contracts, receipts);
7. They promise little or no financial risk;
8. They impose provisions for a lock-up period where an investor cannot touch the investment (i.e. 60 days);
9. They assure pay-off of investments in a short time;
10. They use high-pressure methods to convince investors to reinvest their earnings;
11. Information about their principal office, address, founders, directors or officers are unknown; and,
12. Their orientation seminars are conducted informally.