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. 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.
