SEC launches new alert against cryptocurrency scams

The United States Securities and Exchange Commission (SEC) alerted investors to scams involving digital assets and cryptocurrencies. The news was also shared by the SEC’s Office of Investor Education and Advocacy and the Enforcement Division’s Retail Strategy Working Group, who noted the catastrophic losses retailers face as a result of scams.

The offerings of the new currencies and the growing popularity of the sector have become, in the opinion of the SEC, in the main cause of fraud, scams and “exploitations among retail investors.”

Another important factor is the increase in the value of some crypto assets that has become a fundamental factor in attracting unsuspecting investors: “Investors may be less skeptical of investment opportunities that involve something new or ‘avant-garde’, or they can get carried away by the fear of missing something (FOMO). “

The institution referenced the $ 2 billion BitConnect scam, which caused huge losses to small investors. “The platform allegedly paid for investor withdrawals with investors ‘incoming funds and failed to trade investors’ Bitcoins consistently with their representations, leading to the platform collapsing and investors losing massive amounts of money,” stated the warning.

Regulatory framework

SEC Chairman Gary Gensler recently insisted on the need for a legal instrument to help cryptocurrency investors protect themselves from scammers and other risks associated with the activity.

Gensler considers that the importance of crypto in the coming years is closely related to the public policies that the nation assumes, emphasizing: “Finance is a matter of trust, ultimately.”

The SEC urges investors in digital assets to investigate and assess risks, as well as to be on the lookout for “warning signs of a potential scam, such as promises of high investment returns, lack of clarity on license status, registration and false testimonies.”

M. Rodríguez

Source: cointelegraph