Abstract：The AMF warns retail investors about the growing risks in crowdfunding, highlighting possible capital loss, platform failure, and legal recovery costs when projects default.
Frances financial regulator, the Autorité des Marchés Financiers (AMF), has issued a public warning urging investors to exercise heightened caution when participating in crowdfunding schemes. While crowdfunding platforms—also known as CSPs (Crowdfunding Service Providers)—offer access to innovative projects and early-stage companies, they also carry significant financial risks that are often underestimated.
Unlike traditional investments, crowdfunding often involves backing unlisted startups or growth-phase companies through equity subscriptions, bonds, or peer-to-peer loans. The AMF stresses that these investments come with a high probability of capital loss and limited liquidity, making it difficult for investors to resell their securities or recover funds quickly.
One of the main concerns raised by the AMF is the risk of project default. Although some offerings may promise attractive returns, neither interest payments nor capital repayment is guaranteed. If a project owner runs into financial difficulties, investors could face delayed payments—or lose their entire investment.
There are also hidden costs to consider. Legal proceedings, debt recovery services, or appointing a representative to act on behalf of investors in default cases can result in unexpected and substantial fees, especially relative to the small size of typical crowdfunding investments.
Equally concerning is the risk of platform failure. If a CSP shuts down, investors may lose access to their accounts and be forced to pursue repayments directly from the project owners. Although CSPs are required to have contingency plans, these may not fully cover all post-shutdown investor needs, particularly when legal action is required.
