US: SEC warns public of crypto scams and ICOs


Crypto frauds are on the rise, according to the US Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy (OIEA) and Division of Enforcement’s Retail Strategy Task Force (RSTF).

In its recently published investor alert, the regulator broke down some of the most obvious warning signs of crypto scams.

The SEC’s list of red flags

While making an example of its latest enforcement action against the perpetrators of “one of the largest Bitcoin (BTC) related Ponzi-like schemes,” the SEC warned those considering entering the crypto market.

“Guaranteed” high investment returns “with little or no risk are a classic warning sign of fraud,” according to the regulator that pointed out crypto scammers often post fabricated historical returns on their websites, displaying high investment returns. 

The SEC underscored that “unlicensed and unregistered sellers commit much of the securities fraud targeting retail investors in the US,” while explaining that thorough background checks into the license and registration status of anyone offering an investment in securities could prevent devastating losses. 

Skyrocketing account values are another typical sign that something is fishy, according to the SEC, which pointed out that “depictions of investment accounts rapidly increasing in value and providing large returns are often fake” and strategically used as a bait to lure investors looking for a shortcut to great wealth.

“If an investment “opportunity” sounds too good to be true, it probably is,” concluded the regulator, while reminding that “the potential for high investment returns usually involves high risk.”

“Celebrities, like anyone else, can be lured into participating (even unknowingly) in a fraudulent scheme,” according to the SEC, which drew attention to fake testimonials on social media.

While warning about making investment decisions based solely on celebrity endorsements, the regulator added that scammers sometimes also pay everyday folk to pose as overnight millionaires.

ICOs and FOMO

“​​Digital assets include crypto-currencies, coins, and tokens such as those offered in so-called initial coin offerings (ICOs),” clarified the regulator.

“Before you hand over your money, verify that the individuals and firms offering an investment in securities are licensed/registered using the search tool on Investor.gov,” the SEC advised the unsuspicious, pointing out some of the most typical reasons that lead to shortsighted crypto investments.

According to the regulator, “investors may be less skeptical of investment opportunities that involve something new or “cutting-edge,” or may get caught up in the fear of missing out (FOMO).”

The infamous fear of missing out is largely driven by the rising cryptocurrency prices, read the alert in the end, warning that those anxious about missing the next big opportunity to become very wealthy, very fast are particularly vulnerable. 

Get an edge on the cryptoasset market

Access more crypto insights and context in every article as a paid member of CryptoSlate Edge.

On-chain analysis

Price snapshots

More context

Join now for $19/month Explore all benefits

Like what you see? Subscribe for updates.



Source link

spot_imgspot_imgspot_img

Latest articles

Related articles

Leave a reply

Please enter your comment!
Please enter your name here

spot_imgspot_img