The U.S. Securities and Exchange Commission has issued a warning to investors about scams lurking in the world of cryptocurrency investing.
In a new investor alert, the SEC’s Office of Investor Education and Advocacy (OIEA) and Division of Enforcement’s Retail Strategy Task Force (RSTF) says that scammers are taking advantage of the growing popularity of digital assets.
“Fraudsters continue to exploit the rising popularity of digital assets to lure retail investors into scams, often leading to devastating losses.
If you are considering a digital asset-related investment, take the time to understand how the investment works and to evaluate its risks. Look for warning signs that it may be a scam.”
The report makes five key “red flag” recommendations on how to protect against getting scammed.
- “‘Guaranteed’ high investment returns… with little or no risk are a classic warning sign of fraud.
- Unlicensed/unregistered sellers. Check out the background (including license and registration status) of anyone offering you an investment in securities.
- Skyrocketing account values. Depictions of investment accounts rapidly increasing in value and providing large returns are often fake.
- If an investment ‘opportunity’ sounds too good to be true, it probably is. Remember that the potential for high investment returns usually involves high risk.
- Fake Testimonials. Fraudsters sometimes pay… actors to pose as ordinary people turned millionaires, social media influencers, and celebrities to tout an investment.”
The announcement follows on the heels of the SEC filing charges against the crypto lending platform BitConnect and two of its top executives. BitConnect is accused of defrauding investors of approximately $2 billion and the case is believed to represent the largest crypto scam of all time.
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