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Crypto fraud is on the rise, according to the Office of Investor Education and Advocacy (OIEA) of the Securities and Exchange Commissions (SEC) and the Division of Enforcements Retail Strategy Task Force (RSTF).
In its recently released investor alert, the regulator broke down some of the more obvious warning signs of crypto scams.
The SEC Red Flag List
While making an example of its latest coercive action against the perpetrators of one of the biggest Bitcoin-related Ponzi schemes (BTC), the SEC cautioned those considering entering the crypto market.
Guaranteed high returns on investment with little to no risk are a classic harbinger of fraud, according to the regulator who pointed out that crypto crooks often display historical fabricated returns on their websites, showing high returns on investment. .
The SEC pointed out that unlicensed and unregistered sellers commit much of the securities fraud targeting retail investors in the United States, while explaining that extensive background checks for the licensing and registration status of anyone offering an investment in securities could avoid devastating losses.
The surge in account values is another typical sign that something is fishy, according to the SEC, which pointed out that representations of investment accounts rising rapidly in value and offering significant returns are often bogus and strategically used as bait to attract investors looking for a shortcut to great wealth.
If an investment opportunity sounds too good to be true, it probably is, the regulator concluded, recalling that the potential for high returns on investments usually comes with high risk.
Celebrities, like everyone else, can be tricked into participating (even without knowing it) in a fraudulent scheme, according to the SEC, which has drawn attention to fake testimonials on social media.
While cautioning against making investment decisions based solely on celebrity support, the regulator added that scammers sometimes also pay ordinary people to masquerade as millionaires overnight.
ICO and FOMO
Digital assets include cryptocurrencies, coins and tokens such as those offered in initial coin offerings (ICOs), the regulator said.
Before handing over your money, verify that individuals and companies offering an investment in securities are licensed / registered using the search tool on Investor.gov, the SEC advised low-suspicion people, highlighting some of the most common 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 be caught up in the fear of missing out (FOMO).
Much of the infamous fear of missing out is due to the rise in cryptocurrency prices, read the alert at the end, warning that those who fear missing out on the next big opportunity to get super rich, very quickly are particularly vulnerable.
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