THE financial watchdog has warned over “risky” trading tips being shared on TikTok.
It follows a buying frenzy for Gamestop shares and cryptocurrencies among amateur traders.
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Traders organising themselves on Reddit bought into the US games retailer sending its share price surging, and causing professional hedge funds to lose millions.
TikTok users have been sharing their “tips” for trading shares in Gamestop and other companies, the BBC found, as well as cryptocurrencies like Dogecoin.
But the financial advice does not come with any warnings of the risks involved in investing.
The Financial Conduct Authority (FCA) which regulates the industry and protects consumers, has warned of the risks of taking advice from social media.
An FCA spokeswoman told the BBC: “Consumers should be wary of adverts and advice online and on social media promising high-return investments, and should always do further research on the product they are considering.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
“There are risks with taking unregulated investment advice and we engage with social media platforms to have pages which breach our regulations taken down.”
The BBC found users sharing tips using the hashtags #bigstocktips, #fintok, #stonks, #stocktok and #stockstobuy.
It even found an astrologer talking about how the planets could affect the price of cryptocurrencies.
A TikTok spokesperson said: “We are committed to promoting a safe environment on TikTok, and actively work to educate our community about online safety and media literacy.
“Our Community Guidelines explain what is and is not allowed on our platform, and we remove content that deceives people in order to gain an unlawful financial or personal advantage, including schemes to defraud individuals or steal assets.”
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The FCA last year banned the sale of high risk assets connected to bitcoin and other cryptocurrencies.
Last month it warned that Brits risk losing all their money if they invest in cryptocurrencies.
The regulator has called for new social media rules to include action on scam ads which appear on social media platforms.
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This post first appeared on thesun.co.uk
