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CFO Jimmy Patronis Consumer Alert: Floridians Must Protect Themselves Against Cryptocurrency Scams

5/31/2018

For Immediate Release: Thursday, May 31, 2018
Contact: Anna Alexopoulos Farrar, 850.413.2842, anna.farrar@myfloridacfo.com 
 
CFO Jimmy Patronis Consumer Alert: Floridians Must Protect Themselves Against Cryptocurrency Scams

TALLAHASSEE, Fla.— Cryptocurrency continues to gain momentum in Florida:

• The Seminole County Tax Collector now accepts bitcoin and bitcoin cash to pay for property taxes, driver license and ID card fees, tags and titles
• Tampa/St. Petersburg were ranked seventh in the top 10 bitcoin-friendly cities in 2016
 Miami/Ft. Lauderdale were ranked eighth in the top 10 bitcoin-friendly cities in 2016
 There are more than 160 Bitcoin ATMs across Florida
• An entirely Bitcoin real estate transaction in Miami took place in December 2017
 
CFO Jimmy Patronis said, “With new technology comes new ways for consumers to be defrauded. As cryptocurrency becomes more popular in our state, it’s important for Floridians to fully understand what they are getting into before they invest. Texas has already opened 32 investigations into cryptocurrency investment schemes, and with a local government in our state now accepting bitcoin as a form of payment cryptocurrency isn’t going away. It’s my goal to ensure consumers are protected.
 
“It’s critical that consumers are aware that cryptocurrency remains an unregulated currency and should be aware of the following if they choose to purchase or invest in cryptocurrency.”

1. Do your homework. Never invest based solely on what you read online, on social media, or in a bulletin or mailer. It's easy for a company, its promoters—including celebrities—to make grandiose claims about new product developments, lucrative contracts, or the company's financial health. Before you invest, you must independently verify those claims. Use unbiased sources, including the U.S. Securities and Exchange Commission (SEC) and securities industry self-regulatory organizations.

2. Cryptocurrency values can be unstable. Cryptocurrency can be highly volatile with the potential for complete loss of value. This may affect investors as well as consumers using cryptocurrency as a means of payment. Cryptocurrency's volatility also may make securities offerings tied to these currencies unsuitable for most investors depending on an individual’s financial goals.
3. Cryptocurrencies can be stolen. There is the potential for consumers to incur financial losses if an account is not maintained in a secure manner. Currently, most cryptocurrency accounts or “wallets” – unlike funds held in U.S. banks or credit unions – are not insured against loss.

4. Cryptocurrency transactions may be taxable. For federal tax purposes, the IRS has announced that cryptocurrency is treated as property. General tax principles applicable to property transactions apply to transactions using cryptocurrency. For more information, go to https://www.irs.gov/newsroom/irs-reminds-taxpayers-to-report-virtual-currency-transactions
State and federal regulators are evaluating and developing approaches to regulating cryptocurrency and companies that deal in cryptocurrencies. Any company that offers to exchange, administer, or maintain cryptocurrencies may be subject to state regulation and licensing as well as federal regulation.  

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About CFO Jimmy Patronis
Chief Financial Officer and State Fire Marshal Jimmy Patronis is a native Floridian and a member of Florida’s Cabinet, who oversees the Department of Financial Services. CFO Patronis works each day to fight insurance fraud, support Florida’s firefighters, and ensure the state’s finances are stable to support economic growth in the state. Follow the activities of the Department on Facebook (FLDFS) and Twitter (@FLDFS).