SEC warns crypto-currency investors about scams

The U.S. Securities and Exchange Commission (SEC) has warned against scammers who exploit investors’ fear of missing out (FOMO) on social networks. “If a crypto investment “opportunity” sounds too good to be true, it probably is“, the SEC warned.

The SEC says fraudsters often use social networks to scam investors.

The U.S. Securities and Exchange Commission (SEC) on Monday issued an investor alert titled “”.

The SEC’s Office of Investor Education and Advocacy warned that “fraudsters often use social media to defraud investors“. Encouraging investors to be skeptical and to “Never make investment decisions based solely on information from social networking platforms or apps“, the securities regulator described:

Fraudsters can exploit investors’ fear of missing out to lure them onto social media in ‘crypto’ investment scams.

“If a crypto investment “opportunity” sounds too good to be true, it probably is“, the SEC noted. “Promises of high returns with little or no risk are classic fraud warning signs.“

Fraudsters may also post fabricated historical returns on their websites, showing high investment returns, to lure investors into their schemes.

Anyone considering investing in crypto-assets or any investment related to crypto-assets should “Take the time to understand how the investment works“, advised the securities watchdog. “Check the background (including licensing and registration status) of anyone offering you a securities investment by using the search tool on Investor.gov.“

In addition to the SEC, several other U.S. regulators have warned about crypto-currency scams. Recently, authorities have warned about the crypto-currency scam of “piggybacking“, which is experiencing alarming popularity. The Federal Bureau of Investigation (FBI) also recently warned crypto-currency investors about the “liquidity mining“.

According to blockchain analytics firm Chainalysis, illicit crypto volumes were down 15 percent in the first six months of this year, compared to the previous year. Specifically, “total scam revenue for 2022 currently stands at $1.6 billion, 65% lower than it was through the end of July in 2021, and this decline appears to be related to the decline in the prices of various currencies“, the firm noted.