Ultimate financial tips and fast money with Bitcoin and Co. are promised on social media. Private investors should not be dazzled by such advertising promises, warns the financial regulator.
The financial regulator Bafin warns private investors of the risks of investing in crypto assets and investment tips on social media. Enthusiastic reports about Bitcoin, Ether and Co. were circulating on social media, but investments in crypto assets are highly speculative and just as risky, the regulator warned on Monday. There is a risk of total loss of the money invested.
According to its own statements, the supervisory authority has been receiving increasing inquiries from consumers about Bitcoin and other crypto assets for the past three to four months. “Even if the proportion of private investors in crypto assets is currently still manageable, we have recently been receiving more and more information from consumers about dubious platforms, including from the crypto sector,” said Thorsten Pötzsch, Executive Director of Bafin responsible for securities supervision, of the German Press Agency .
“The question often arises as to whether and how consumers can get back the money they have invested.”
Financial supervision is critical of tips from social media
The financial regulator takes a critical view of investment tips on social media such as YouTube, Facebook, Twitter and Instagram. It is true that there is good information there with a serious background. But there were also countless incorrect or only partially correct representations, reported Pötzsch.
“Influencers who comment on financial products often don’t really know them well enough themselves,” explained the Bafin executive director. “However, they suggest the opposite to their followers and also rely on their fear of possibly missing out on a trend.”
They also often did not disclose that they themselves benefited from the purchases of their followers. “In addition, scammers also use social media to spread misinformation.”
Safe and fast money: doesn’t exist!
According to the findings of the financial supervisory authority, private investors are now increasingly relying on tips in social media. In an online survey by the Bafin last year, 20 percent of those surveyed stated that they found out about financial topics on YouTube, Facebook and Co.
According to the survey, almost 17 percent had already implemented a financial tip without having previously obtained information from other sources. Almost seven percent said that advice on how to make a lot of money quickly was only available on social media. “That was the reason for us to take up the topic,” explained Pötzsch.
The Bafin advises investors to check the seriousness of the tipster. They should not be blinded by the number of followers, likes or positive comments. Apparently positive comments or references to supposed investment successes could have been fictitious and placed on behalf of the author.
Investors should be particularly skeptical about exceptionally high profit promises. Fraud is often behind it. There is no such thing as “safe, quick money,” the supervisor warned.