The SEC Issues a Warning Regarding Crypto Investment Scams, Citing Some Investors FOMO
Crypto Pirates
English - September 13, 2021 00:33 - 3 minutes - 6 MBTechnology Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
The United States Securities and Exchange Commission (SEC) has issued a warning concerning fraudulent cryptocurrency investment schemes. The regulator adds that some investors may be experiencing fear of missing out (FOMO) as a result of the recent price increase of some crypto assets.
The SEC Warns Investors Against Cryptocurrency Scams
The Securities and Exchange Commission's Office of Investor Education and Advocacy (OIEA) and the Division of Enforcement's Retail Strategy Task Force (RSTF) published an Investor Alert last week on cryptocurrency investment schemes.
The notification states that "Fraudsters continue to take advantage of the growing popularity of digital assets to attract retail investors into schemes, frequently resulting in catastrophic losses."
Given the growth in price of certain digital assets in recent years, some investors may have FOMO [fear of missing out], fearful that they may lose an opportunity to become extremely wealthy.
The alert details several red flags of a scam. Guaranteed high investment returns... with little or no risk” is a well-known red flag of deception. The SEC said that fraudsters may even present fabricated history returns on their websites to demonstrate great investment returns.
Another red flag is the seller's lack of a licence or registration. According to the SEC, “unlicensed, unregistered sellers commit the majority of securities fraud directed at retail investors in the United States.”
Additionally, scammers frequently invent investment returns in order to seduce investors. Additionally, the SEC cautioned that "if an investment 'opportunity' seems too good to be true, it almost always is."
Finally, the notification warns against the use of "false testimonials." The SEC highlighted that investors should never make investing decisions exclusively on the basis of testimonials, stating:
Fraudsters occasionally pay individuals – such as actors posing as ordinary people who become billionaires, social media influencers, and celebrities – to promote an investment on social media or in a video.