How to determine the legal risks of a crypto project?

By 2024, the global cryptocurrency market will accumulate revenue of more than 20 billion USD. It looks, agree, very, very attractive, doesn't it? There is a possibility that there will come a time when some regions will decide to completely switch to digital currency only. Could anyone have thought of this even 5 years ago? The world, of course, does not stand still, but the risks are also increasing. Digital literacy and financial competencies are required.

When business entities start using new digital financial mechanisms, they must understand all the risks. But it is possible to minimize the probability that the investment will be lost.

Cryptomongering – not a novelty, when bitcoin appeared, many scams became popular:

• phishing;
• fraud in social networks;
• social engineering.

The lack of security credentials should immediately alert you. If you receive a winning email from an unknown domain, do not open it. And of course, quite often fraudsters demand to provide the pin code of the wallet, which cannot be done.

The scope for deception is huge in social networks. A fraudster may try to impersonate a famous representative of the crypto business.

It is common practice to engage cloud mining companies. Investors pay such companies the so-called subscription fee in exchange for bitcoins. Many of them work illegally. Customers lose hundreds of millions of dollars when such a company closes. That's why vigilance hasn't stopped anyone yet.

What to do in order not to fall into the trap of fraudsters?

Be sure to learn everything about the project:

• who is on the development team;
• who supports the project;
• what does the business model of the project look like, does it have any signs of a pyramid scheme;
• project guarantees;
• legal structure of the company;
• how does the company website look: does it have all the information there, or is it a simple one-page resource.

Invest only funds that you don't mind parting with. If you are a beginner investor, you can start with CFDs. CFDs are considered one of the safest crypto transactions.

But mining companies have always been high-risk.

Next, you will have to choose a jurisdiction if you want to invest in a crypto fund. It is worth considering:

• terms;
• cost;
• legal status of cryptocurrency in the country;
• goals of the fund.

Even at the initial stage, you cannot do without the help of a lawyer who has knowledge of cryptocurrencies. Approach the choice of such a specialist with all responsibility. You won't surprise anyone with virtual technologies, but you can't lose your vigilance. Only in this case will blockchain help improve your business activity, ensure anonymity and security. This technology was originally designed for this purpose.