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The US Securities and Exchange Commission (SEC) issued a new alert against digital asset and crypto investment scams recently. This alert was published by SEC’s Office of Investor Education and Advocacy (OIEA) and the Division of Enforcement’s Retail Strategy Task Force (RSTF).
SEC Publishes Investor Alert Against Crypto Investment Scams
On Sept 1, the SEC released a fresh alert to educate cryptocurrency investors about fraudulent schemes in the digital asset industry. The regulator pointed out that most investors become susceptible to scams due to FOMO (fear of missing out) or claims about “cutting-edge” technology.
To explain the scale of “devastating losses” faced by unsuspecting traders, the SEC cited its lawsuit against BitConnect. As reported earlier, the cryptocurrency firm and its top executives were charged with a $2 billion fraud for running one of the biggest Bitcoin-related Ponzi schemes to date.
The securities regulator also listed out a series of red flags to help investors filter investment opportunities. The importance of buying assets from licensed vendors was repeated more than once. Aside from that, SEC cautioned the public against promises of high investment returns, fake depictions of investment accounts, fabricated testimonials, and investments that sounded too good to be true.
Crypto Assets Cannot Last Long Outside Public Policy: Gary Gensler
Earlier this month, SEC chair Gary Gensler reiterated the need for regulations in the crypto sphere to safeguard investors and ensure the longevity of the industry.
Gensler said that if digital assets are “going to have any relevance five and 10 years from now, it’s going to be within a public policy framework.” He added that finance is all about trust and history indicates that crypto won’t be able to thrive outside laws.
The SEC chair has previously suggested that cryptocurrencies should be treated as securities and therefore, should fall under the jurisdiction of his agency.