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Cryptocurrency scams remain the top risk for investors

Wednesday, January 12, 2022 16:30 PM (GMT+7)

A North American investor protection agency says investors need to be extra careful with cryptocurrencies, after 2021 hit a record for scams of this asset class.

Investing in cryptocurrencies and digital assets is the top risk for investors “for now,” according to new data from the North American Securities Administrators Association (NASAA).

North America’s annual survey of securities regulators urges investors to exercise caution before investing in popular but volatile and unregulated asset classes, especially cryptocurrencies and financial markets. digital product. “The most obvious and common sign of a scam is an offer of high return without risk,” said Melanie Senter Lubin, NASAA President and Maryland Securities Commission Commissioner. Investors need to understand what they are investing in and with whom… Education and information are the best shields against scams.”

The NASAA report added that digital assets “have no correct place in the current regulatory framework for investors,” making it easier for those promoting this type of product to “defraud the public.” “.

Joseph Rotunda, member of the NASAA Enforcement Committee, expressed his views: “Before you jump into the crypto craze, remember that cryptocurrencies and related financial products may be nothing. other than a front for Ponzi schemes and other scams.”

Mr. Rotunda further added that investing in cryptocurrency exchanges, mining pools, deposit accounts and security tokens “should be taken for granted: speculative investments are extremely risky and risky. cause big losses”.

According to blockchain analytics firm Chainalysis, the value of cryptocurrencies in scams, thefts, and other crimes hit a record $14 billion in 2021, up 79% from 2020, mostly due to the emergence of decentralized finance (DeFi) platforms. DeFi aims to remove middlemen like banks from traditional financial transactions through the use of blockchain technology.

Fraud is the most valuable crypto-related crime in 2021. This is followed by theft, mainly due to intrusions and theft of funds from companies and exchanges. .

NASAA notes that many of the risks to investors today come from a private placement, an activity that is exempt from registration requirements by federal law in the United States. States also do not have the authority to enforce investor protection laws in private placement cases. In addition, fraudulent offers related to promissory notes, Internet and social media scams, and models involving self-invested individual retirement accounts (IRAs) are also on the list of risks. top for individual investors.


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