Scammers prey on investors’ FOMO (the fear of missing out) on social media, according to a warning from the U.S. Securities and Exchange Commission (SEC). The SEC has warned that if a crypto currency investment “offer” seems too good to be true, it probably is.
The SEC has warned that fraudsters frequently use social media platforms to deceive potential victims.
In an Investor Alert titled “Social Media and Investment Fraud,” the U.S. Securities and Exchange Commission (SEC) warned investors about the dangers of social media platforms.
Fraudsters “frequently use social media to deceive investors,” the SEC’s Office of Investor Education and Advocacy said. Investments should “never be made based only on information from social media sites or applications,” the securities regulator warned, adding that investors should exercise skepticism.
Potential victims of ‘crypto’ investment scams on social media may have their expectations for the market manipulated by posts that promise quick returns.
The SEC warned that investors should be wary of any cryptocurrency investment “opportunity” that seems too good to be true. High investment returns with no risk at all are a telltale sign of fraud, as are other similar promises.
It is not uncommon for fraudsters to use websites boasting inflated investment returns from fictitious past periods to entice potential victims.
Any potential investor in crypto assets or comparable investments should “take the time to understand how the investment works,” the securities regulator has said. “Use the search engine on Investor.gov to learn more about anyone offering you an investment in securities, including their background (including license and registration status).
The SEC isn’t the only U.S. watchdog that has sounded the alarm about cryptocurrency scams. Authorities have recently raised concerns about a cryptocurrency fraud called “pig butchering” that has been gaining a disturbing amount of traction. The FBI has also lately warned crypto investors to be wary of the liquidity mining fraud.
Chainalysis, a blockchain analytics business, reports that illegal crypto volumes dropped by 15% in the first half of this year when compared to the same period in 2017. In particular, the company highlighted that “Total scam revenue for 2022 currently sits at $1.6 billion, 65% lower than where it was through the end of July in 2021,” with the fall appearing to be connected to declining prices across multiple currencies.
Is the SEC’s warning against cryptocurrency investment scams warranted, in your opinion? Leave a comment and let us know what you think.