Welcome back to our series of blog posts on the history and philosophy of the economy, bankruptcy, and debt – today let’s talk again about a more current topic: cryptocurrency.
This post will continue to merely skim the surface of current cryptocurrency issues, for what it is worth. Carrying on from the discussion of cryptocurrency and non-fungible-token scams, let us discuss what someone might do about falling victim to such a scam.
First, consider falling victim to a pump-and-dump scheme. It is worth noting that it is possible these scams are entirely allowable because the relevant securities legislation does not currently apply to the crypto industry. However, it is possible that catastrophic losses of a cryptocurrency and/or non-fungible-token portfolio can be mitigated by filing a chapter 7 bankruptcy. Second, consider a rug-pull. A rug-pull is a bit more nefarious of a scam than the pump-and-dump because the motives of the scammers more closely aligned to “classic” fraud, that is: “a misrepresentation which is false and known by the defendant to be false, made for the purpose of inducing the plaintiff to rely upon it.” So, a victim of a rug-pull also hypothetically could use a bankruptcy to mitigate losses due to a rug-pull.
Regardless of the scam, victims should always report fraud and suspicious activity in the crypto and NFT marketplaces. The Federal Trade Commission is a good place to start filing a report: reportfraud.ftc.gov. Depending on the particular circumstances, a variety of government offices might be recipients:
- Commodity Futures Trading Commission;
- U.S. Securities and Exchange Comission;
- Internet Crime Complaint Center; and/or,
- the specific cryptocurrency exchange service used.
These reports will also serve as persuasive evidence in a potential bankruptcy, lending credence to the presence of fraud.
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We will continue our discussion of cryptocurrency next time. If you are interested in the history and philosophy of the economy, bankruptcy, and debt, stay tuned for my blog posts. And, if you are thinking about filing, reach out to us at www.lifebacklaw.com.
