INVESTORS are being urged to avoid new cryptocurrencies called PooCoin and SafeMoon.
The latest bizarre launch, PooCoin, has a logo shaped like the poo emoticon, which may appear to be a joke.
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Not much is known about the new "cryptocurrency" and consumers who invest run a serious risk of losing their cash.
It comes as the value of SafeMoon is currently down by more than 25% over the past 24 hours, compared to around 50% earlier today.
SafeMoon technically isn't a cryptocurrency but a decentralised finance (DeFi) token, according to its website.
They are very complex but essentially aim to disrupt the finance world to enable people to follow and lend in peer-to-peer networks, without needing a bank.
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.
Both PooCoin and SafeMoon are new and launched last month on March 8.
Little is known about the cryptocurrencies and whether they're legit, meaning the risks to your investments are extremely high.
You should only invest if you understand it and can afford to lose the money, and keep in mind the value can go down as well as up in the blink of an eye.
Cryptocurrencies are also highly volatile and a speculative investment, with limited track records and no underlying value.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told The Sun: "There are now thousands of cryptocurrencies and tokens in circulation with the names becoming weirder by the day.
"[PooCoin] is the latest to be pushed out, and traders would be wise to hold their noses and keep their distance.
"The latest coins to be dropped into the crypto wild west slot machine may appear to be a joke, but could be no laughing matter for traders who dabble in products they don’t fully understand with money they can’t afford to lose."
While Laith Khalaf, financial analyst at AJ Bell, added: "An investment strategy based on the popularity of an emoji probably isn’t going to be particularly successful.
"I suspect this sort of token is largely used by members of the tech community looking to have a bit of fun, and anyone buying some should be prepared to lose their money.
"Given the extreme volatility of cryptoassets and the sheer number of them out there at the moment, returns from buying PooCoin could be crappy."
What is SafeMoon?
NOT a huge amount is known about Safe Moon and whether it’s legit, meaning the risk to your investment is very high.
SafeMoon technically isn't a cryptocurrency but a DeFi token, which stands for decentralised finance token.
They are very complex but essentially aim to disrupt the finance world to enable people to follow and lend in peer-to-peer networks, without needing a bank.
Like Bitcoin they use a complicated method called blockchain technology.
SafeMoon claims it will reward people who buy and hold onto the cryptocurrency.
For those who sell the currency on will be slapped with a penalty.
SafeMoon charges sellers a fee worth 10% of the amount of the cryptocurrency they are flogging to buyers.
It then claims to reward investors that hold onto their purchases by redistributing 5% of the cash gained from the penalty charge among those who already have the currency.
Meanwhile, SafeMoon is similar to a pyramid selling scheme, said Mr Khalaf.
He added: "You’re simply reliant on someone further down the line being willing to pay more than you did to turn a profit, which is a risky bet indeed."
While Ms Streeter said: "Much of the demand [for SafeMoon] has come from traders hoping to benefit from future price rises rather than using the coins or tokens as a means of exchange.
"Predicting the point at which demand subsides and prices begin to fall is very difficult, if not impossible, and people risk getting their fingers seriously burnt."
Cryptocurrency firms aren't regulated in the way that other financial firms are, meaning you won't have any protection if things go wrong.
You won’t be able to take a complaint to the Financial Ombudsman Service, for example.
UK crypto asset businesses must register with the Financial Conduct Authority – and you can check to see if they are on the Financial Services Register or if they are on a list of firms with temporary registration.
There is also a list of businesses not registered. If they are on this list then they may be operating illegally.
In January, the Financial Conduct Authority warned that Brits risk losing ALL of their money if they invest in cryptocurrencies.
Meanwhile, an advert for a bitcoin exchange Coinfloor was banned last month for telling savers cryptocurrencies are a safe investment.
People considering investing in Bitcoin or shares and stocks have also been warned over "risky" tips being shared on TikTok.
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