Medical marijuana, digital currencies among emerging investor threats

Freeman Staff

Nov. 13, 2014

MADISON - The Wisconsin Department of Financial Institutions identified Wednesday emerging threats facing investors in the coming year - including schemes involving marijuana-related businesses and digital currencies.

Promoters of medical marijuana, which is now legal in 23 states and the District of Columbia, have seized on this new market to sell investments in companies that provide products and services to the marijuana industry such as vaporizers, hydroponic supplies, lighting systems, and security systems.

“Many of the top threats facing investors involve new products in classic schemes,” said Patricia Struck, administrator of DFI’s Division of Securities. “We are seeing threats to investors morph into new risks, many fueled by the Internet. Overarching all of these threats are unlicensed agents selling unregistered products to unsuspecting investors.”

Other emerging threats include stream-of-income investments - where investors looking for monthly returns are enticed into making risky investments with individuals selling pension payments or government disability payments - plus digital currency and cyber-security risks.

Digital currencies have emerged as a new method to pay for goods and services.  But the rapid price increase in currencies like Bitcoin have sparked considerable public interest and media attention, leading to a fresh market for securities offerings tied to digital currencies.

“Investors should independently verify any investment opportunity,” said Struck, “as well as the background of the person and company offering the investment.”