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October 2, 2019
Vancouver
– The British Columbia Securities Commission (BCSC) is alerting investors about
“smart wallet” apps that purportedly store a person’s crypto-assets and earn
money for depositors.
The apps promise to reward users through automated trading
of crypto-assets on various exchanges. If users deposit a certain amount, they can
activate artificial intelligence software that is supposed to find and execute
high-frequency crypto-asset trades. The purported trading is not controlled by
the app’s users.
One app, WoToken Wallet, claims that users will
realize earnings of six to 20 per cent monthly by activating the trading
software. Another app, Cloud Wallet, says users will earn six to 15 per cent
monthly in the same way.
Users are told they will receive bonus payments by
persuading other people to use the wallet; the payments depend on how much
those recruits earn from the crypto-asset trading software. If a depositor’s recruits
persuade others to use the wallet and they, too, reap trading profits, the
depositor supposedly receives additional bonuses.
“These apps’ claims of big payouts from some kind of
automated crypto-asset trading appear too good to be true,” said Doug Muir, the
BCSC’s Director of Enforcement. “The apps also resemble a pyramid scheme, in
which investors are promised earnings if they get others to join in. Big
promises and pyramid-like payouts are both classic warning signs of risky
investments. We urge everyone to approach these apps with extreme caution.”
Users are required to make a minimum deposit of US$100
to US$1,000 in crypto-assets. The bonuses are paid out in a crypto-asset that
is particular to each app, which can supposedly be converted into more
commonly-traded crypto-assets like bitcoin or ether, and then into conventional
currency.
Cloud Wallet is available on Apple’s App Store and
Google Play. WoToken Wallet can only be downloaded from a website unconnected
to the App Store and Google Play.
WoToken Limited, the company behind the WoToken Wallet,
is based in the British Virgin Islands. WoToken Wallet’s Facebook page also
mentions a connection to WO Data Group Ltd., which was recently registered in
B.C., and WO Data Group Limited, which was recently registered in Colorado.
The company behind Cloud Wallet, Cloud Technology
& Investments Pty Ltd., is registered in Australia. One of the people
promoting Cloud Wallet in online forums lives in Canada.
The BCSC is warning the public about using these apps.
In addition, the BCSC and other Canadian securities regulators
urge
caution
when buying crypto-assets through trading platforms
because no crypto-asset trading platforms are recognized as an exchange or
otherwise authorized as a marketplace or dealer in Canada.
About the British Columbia Securities Commission (
www.bcsc.bc.ca
)
The British
Columbia Securities Commission is the independent provincial government agency
responsible for regulating capital markets in British Columbia through the
administration of the Securities Act.
Our mission is to protect and promote the public interest by fostering:
-
A securities market that is fair and warrants public
confidence
-
A dynamic and competitive securities industry that
provides investment opportunities and access to capital
Media
Contact:
Brian Kladko
604-899-6713
Public
inquiries:
604-899-6854 or 1-800-373-6393 (toll free)
inquiries@bcsc.bc.ca
Learn how to
protect yourself and become a more informed investor at
www.investright.org
