The Securities and Exchange Commission (SEC) recently issued a warning to crypto investors about scammers taking advantage of their FOMO (fear of missing out) on social media platforms.
The federal agency warned that if a crypto investment opportunity comes off as too good to be true, then it probably is.
This Monday, an Investor Alert was published by the US SEC, which boasted the title of ‘Social Media and Investment Fraud’.
While online fraud and scams may not be a new thing, it is a well-known fact that scammers and fraudsters constantly come up with new tactics and channels to carry out their activities.
This is exactly what the Securities and Exchange Commission (SEC) wanted to highlight. The Office of Investor Education and Advocacy of the SEC issued the warning.
It said that fraudsters are now scamming investors through the use of social media. The agency encouraged investors to always be skeptical.
It also advised them to refrain from many any investment decisions only based on the information they can find on social media apps or platforms.
The securities regulator asserted that fraudsters are leveraging the FOMO that investors experience in order to lure them onto social media platforms and engage them in crypto investment scams.
Warnings of fraud
The SEC said that any crypto investment that sounds too great should not be taken at face value. It said that there are some classic signs of fraud, which include the promise of high returns, with minimal or no risk.
Moreover, the regulator said that it is also the norm for these fraudsters to post fake historical returns in order to lure investors by convincing them that generating high returns is a possibility.
The securities watchdog said that anyone who wants to invest in crypto assets, or any other investment related to cryptocurrencies, should first have a clear understanding of how it works.
It advised that investors should always do a thorough background check, which includes checking the registration and licensing status, of companies that are offering an investment opportunity.
It is not just the Securities and Exchange Commission (SEC) that has warned people about the widespread crypto scams.
Other regulatory authorities in the United States have also done the same. Authorities recently issued a warning about the ‘pig butchering’ crypto scam, which has become extremely popular these days.
Quite recently, the Federal Bureau of Investigation (FBI) issued a warning to crypto investors about it to ensure they do not fall for the liquidity mining scam.
Blockchain intelligence firm Chainalysis released a report, which highlighted that the first half of the year had seen a 15% decline in illicit crypto volumes, as opposed to last year.
The company said that the amount of revenue generated via crypto scams was 65% lower than the previous year, as it stood at $1.6 billion.
However, the firm also noted that this was mostly because there was a widespread decline in prices in the crypto market, which had reduced the interest of people in the space.