The U.S. Securities and Change Fee (SEC) has issued a warning about fraudulent funding 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 Change Fee’s Workplace of Investor Training and Advocacy (OIEA) and Division of Enforcement’s Retail Technique Process Drive (RSTF) issued an Investor Alert on crypto funding scams final 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 traders could have FOMO [fear of missing out], given the rise in value of some digital property in recent times, that they will miss an opportunity to become very wealthy.
The discover outlines some warning indicators of a rip-off. “Guaranteed high investment returns … with little or no risk” is a classic warning sign of fraud. Fraudsters could even put up bogus historic returns on their web sites to indicate excessive funding returns, the SEC detailed.
Another sign is that sellers are unlicensed or unregistered. The SEC said that “Unlicensed, unregistered sellers commit a lot of the securities fraud concentrating on retail traders within the U.S.”
In addition, fraudsters often fabricate investment returns to entice investors. The SEC additionally warned that “If an funding ‘alternative’ sounds too good to be true, it in all probability 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 typically pay individuals – for instance, actors to pose as abnormal individuals turned millionaires, social media influencers, and celebrities – to tout an funding on social media or in a video.
