North American Securities Administrators Association (NASAA) comprising of regulators from the U.S., Canada and Mexico have identified cryptocurrency investments as the most significant investor threat in 2022
In a blog post, NASAA stated that although the cryptocurrency sector has resulted in millionaires, the industry is prone to scammers taking advantage of individuals seeking to join the space.
Furthermore, the organization identified the sector’s volatility as another investor concern.
Picks for you
“By far, NASAA’s securities regulators revealed that investments related to cryptocurrencies and digital assets is our top investor threat. <…> Stories of ‘crypto millionaires’ attracted some investors to try their hand at investing in cryptocurrencies or crypto-related investments this year, and with them, many stories of those who bet big and lost big began appearing, and they will continue to appear in 2022,” NASAA’s Enforcement Section Committee Vice-Chair Joseph Rotunda said.
Rotunda noted that investments in cryptocurrency trading programs, crypto mining pools, crypto depository accounts, and securitized tokens are the riskiest products investors should look out for.
The regulators added that unsuspecting investors are usually enticed with the payment of safe, lucrative, guaranteed returns over relatively short terms.
According to NASAA, many fraud threats are related to private offerings, which are not part of the federal law registration requirements.
The NASAA survey also indicated that besides cryptocurrencies, investors were concerned with fraud offerings linked to promissory notes, social media money scams and, financial schemes related to self-directed individual retirement accounts.
The entity acknowledged that the sector’s lack of a clear regulatory framework encourages bad actors to exploit unsuspecting investors.
Scammers leverage on 2021 crypto sector growth
In 2021, the cryptocurrency market registered significant growth, topping $3 trillion in market capitalization at some point. The growth was led by Bitcoin alongside a host of meme cryptocurrencies.
As reported by Finbold, amid the growth, cryptocurrency investors lost over $2.8 billion in 2021 due to ‘rug pulls,’ a colloquial name for a form of crypto scam.
In general, NASAA urged investors to exercise caution before purchasing popular and volatile unregulated investments, especially cryptocurrencies.
