SEC Warns Crypto Investors of Scammers Exploiting Their Fear of Missing Out on Social Media
The U.S. Securities and Exchange Commission (SEC) has warned about scammers exploiting investors’ fear of missing out (FOMO) on social media. “If a crypto investment ‘opportunity’ sounds too good to be true, it probably is,” the SEC cautioned.
SEC Says Scammers Often Use Social Media to Defraud Investors
The U.S. Securities and Exchange Commission (SEC) published an Investor Alert titled “Social Media and Investment Fraud” Monday.
The SEC’s Office of Investor Education and Advocacy warned that “fraudsters often use social media to scam investors.” Encouraging investors to be skeptical and “never make investment decisions based solely on information from social media platforms or apps,” the securities regulator described:
Fraudsters may exploit investors’ fear of missing out to lure investors on social media into ‘crypto’ investment scams.
“If a crypto investment ‘opportunity’ sounds too good to be true, it probably is,” the SEC stressed. “Promises of high investment returns, with little or no risk, are classic warning signs of fraud.”
Fraudsters may also post fabricated historical returns on their websites showing high investment returns as a way to lure investors into their schemes.
Anyone considering investing in crypto assets or any crypto-related investments should “take the time to understand how the investment works,” the securities watchdog advised. “Check out the background (including license and registration status) of anyone offering you an investment in securities using the search tool on Investor.gov.”
Besides the SEC, several other U.S. regulators have warned about cryptocurrency scams. Recently, authorities warned of the “pig butchering” cryptocurrency scam becoming alarmingly popular. The Federal Bureau of Investigation (FBI) also recently cautioned crypto investors not to fall for the liquidity mining scam.
According to blockchain analytics firm Chainalysis, illicit crypto volumes were down 15% in the first six months of this year, compared to the previous year. Specifically, “Total scam revenue for 2022 currently sits at $1.6 billion, 65% lower than where it was through the end of July in 2021, and this decline appears linked to declining prices across different currencies,” the firm noted.
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