Skip Navigation Links
How I avoided a crypto investment
13 Nov 2022 (219 views)  

Six months ago, a friend asked for my advice about a crypto product. He invested in the product and asked for my opinion if it is a good investment. 

I asked him for a brochure that describes the product, but it was not available. He asked me to attend a 10 minute presentation for someone to explain the product. I declined to attend the presentation. 

This is a common marketing approach:

1. Someone invested in the product and made a good return. (It may be any product - crypto, gold, oil, whatever is the flavor of the day).

2. He is asked to tell their friends and family about the product and introduce them to invest in the product. The introducer earns a commission for each account opened. Nowadays, the introducer is called "an influencer".

3. The attractive return on the product comes out of the marketing budget. The actual earning from investing the product may be much lower. It is also possible that the high return is obtained by investing the money in risky products that may go up (and hence pay a good return), or it may go burst when the bubble burst.

Recently, many investors lost money in investing their money in the FTX crypto exchange.  The value of the crypto asset dropped sharply in value. The FTX exchange was not able to redeem the money deposited into the account. 

I did not find out the product that my friend wanted to seek my advice.  So, I do not know if it is invested in the FTX exchange or some other exchanges. 

Over the past decades, I have come across many investment products of this kind. Most of them are scams. They follow a similar pattern in the product design and the marketing practice. 

I am not sure if the influencers are contravening the MAS regulations. If they are selling a financial product, they need to get a license. Maybe, they get around the regulation by being an introducer, or an influencer. 

Tan Kin Lian
 

How I avoided a crypto investment
[Back] [Print]


Six months ago, a friend asked for my advice about a crypto product. He invested in the product and asked for my opinion if it is a good investment. 

I asked him for a brochure that describes the product, but it was not available. He asked me to attend a 10 minute presentation for someone to explain the product. I declined to attend the presentation. 

This is a common marketing approach:

1. Someone invested in the product and made a good return. (It may be any product - crypto, gold, oil, whatever is the flavor of the day).

2. He is asked to tell their friends and family about the product and introduce them to invest in the product. The introducer earns a commission for each account opened. Nowadays, the introducer is called "an influencer".

3. The attractive return on the product comes out of the marketing budget. The actual earning from investing the product may be much lower. It is also possible that the high return is obtained by investing the money in risky products that may go up (and hence pay a good return), or it may go burst when the bubble burst.

Recently, many investors lost money in investing their money in the FTX crypto exchange.  The value of the crypto asset dropped sharply in value. The FTX exchange was not able to redeem the money deposited into the account. 

I did not find out the product that my friend wanted to seek my advice.  So, I do not know if it is invested in the FTX exchange or some other exchanges. 

Over the past decades, I have come across many investment products of this kind. Most of them are scams. They follow a similar pattern in the product design and the marketing practice. 

I am not sure if the influencers are contravening the MAS regulations. If they are selling a financial product, they need to get a license. Maybe, they get around the regulation by being an introducer, or an influencer. 

Tan Kin Lian