Another prominent regulator has weighed in on initial coin offerings.

The US' brokerage and exchange markets regulator has issued a warning to investors contemplating initial coin offerings (ICOs), cautioning that the controversial fundraisers “can be used by con artists... to dupe investors”.

ICOs are a crowdfunding method used by crypto-currency start-ups looking to grow their business. Such firms will create a new crypto-currency and sell the digital tokens to investors in exchange for fiat money. Unlike an initial public offering (IPO), however, an ICO typically does not give investors an ownership stake in the company.

“Investing in an ICO may seem like an exciting way to be a part of the virtual currency and blockchain start-up markets, but buyers should use caution when considering these complex investments,” said Gerri Walsh, FINRA’s senior vice president for investor education. “ICOs involve new technologies and products that are highly technical and can be used by con artists as an opportunity to dupe investors.” 

FINRA's warning comes as ICOs continue to gain momentum as digital currency entrepreneurs increasingly use them to quickly raise millions with little or no regulatory oversight.

By mid-July this year, technology firms had raised around $1.1 billion through 89 coin sales, roughly 10 times more than that in the whole of 2016, according to Reuters. There are 110 upcoming ICOs still to come this year, according to tokendat.io, an online token sales tracker. 

But stakes are high: criminal losses related to ICOs are at around $225 million this year, according to Chainalysis, a New York-based anti-money laundering software developer that analyzes transactions. In phishing scams, investors are tricked into sending money to internet addresses that are a guise for funding sites for ICOs.

More than 30,000 people have fallen victim to ethereum-related cyber-crime since January, losing an average of $7,500 each, Chainalysis estimates. Ethereum is a rival crypto-currency to bitcoin, the first and most well-known digital coin. 

“It’s a huge amount of money to generate in such a short period of time,” said Jonathan Levin, co-founder of Chainalysis, whose software and database are used by some of the largest bitcoin companies and US law enforcement agencies. “The crypto-currency phishers are doing pretty good against all the other types of criminals that are out there.”

Wall Street's main watchdog, the Securities and Exchange Commission, said in July that if digital tokens sold through an ICO could be considered securities or equivalent, the companies conducting them will need to be registered and regulated unless a valid exemption applied. 

Last month, Singapore followed suit when the city-state's central bank and regulator stepped in to say it would bring some ICOs into its regulatory scope.