The US Securities and Exchange Commission (SEC) has warned of fraudulent investment plans with cryptocurrencies. The regulator notes that given the price spike in some crypto assets in recent years, some investors may be afraid of missing out (FOMO).
SEC warns investors about crypto scams
The SEC’s Office of Investor Education and Advocacy (OIEA) and the Division of Enforcement’s Retail Strategy Task Force (RSTF) issued an investor warning on crypto investment fraud last week.
The press release said: “Scammers continue to use the rising popularity of digital assets to trick retail investors into scams, often resulting in devastating losses,” added:
Some investors may have FOMO [fear of missing out], given the rise in the price of some digital assets in recent years, that they are going to miss an opportunity to get very rich.
The notice contains some warning signs of fraud. “Guaranteed high investment returns … with little or no risk” is a classic warning sign of fraud. Scammers can even post fake historical returns on their websites to show high investment returns, the SEC said.
Another sign is that sellers are not licensed or not registered. The SEC stated that “unlicensed, unregistered sellers commit much of the securities fraud that targets retail investors in the United States.”
In addition, fraudsters often fabricate investment returns to attract investors. The SEC also warned, “If an investment opportunity sounds too good to be true, it probably is.”
Finally, the notice warns of “falsified certificates”. Stressing that investors should never rely solely on testimonials in making an investment decision, the SEC stated:
Scammers sometimes pay people – for example, actors posing as ordinary people who have become millionaires, social media influencers, and celebrities – to promote an investment on social media or in a video.
What do you think of this SEC warning on crypto fraud? Let us know in the comment section below.
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