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The U.S. Securities and Exchange Commission (SEC) has issued a warning about fraudulent investment schemes involving cryptocurrencies. The regulator notes that some investors may have fear of missing out (FOMO) given the rise in prices of some crypto assets in recent years.
SEC Warns Investors of Crypto Scams
The U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy (OIEA) and Division of Enforcement’s Retail Strategy Task Force (RSTF) issued an Investor Alert on crypto investment scams last week.
The notice explains that “Fraudsters continue to exploit the rising popularity of digital assets to lure retail investors into scams, often leading to devastating losses,” adding:
Some investors may have FOMO [fear of missing out], given the rise in price of some digital assets in recent years, that they will miss an opportunity to become very wealthy.
The notice outlines some warning signs of a scam. “Guaranteed high investment returns … with little or no risk” is a classic warning sign of fraud. Fraudsters may even post bogus historical returns on their websites to show high investment returns, the SEC detailed.
Another sign is that sellers are unlicensed or unregistered. The SEC stated that “Unlicensed, unregistered sellers commit much of the securities fraud targeting retail investors in the U.S.”
In addition, fraudsters often fabricate investment returns to entice investors. The SEC also warned that “If an investment ‘opportunity’ sounds too good to be true, it probably is.”
Lastly, the notice warns of “fake testimonials.” The SEC emphasized that investors should never rely solely on testimonials when making an investment decision, elaborating:
Fraudsters sometimes pay people – for example, actors to pose as ordinary people turned millionaires, social media influencers, and celebrities – to tout an investment on social media or in a video.
What do you think about this SEC warning about crypto scams? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
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