Cryptocurrency investments have been identified as the top investor threat by state securities regulators. Investors, especially those who purchase popular and volatile unregulated investments, such as cryptocurrency and digital assets, should exercise caution before purchasing them, according to the annual survey of North American securities regulators.

A regulator issued a warning, “Before you jump into the crypto craze, be mindful that cryptocurrencies and related financial products may be nothing more than public facing fronts for Ponzi schemes and other frauds.”

Based on a study conducted by a blockchain analytics firm, scammers made a whopping $14 billion in cryptocurrency in 2021, mostly because of the growth of decentralized financial platforms. Defi is a rapidly growing sector in the crypto market that uses blockchain technology to eliminate middlemen like banks.

The NASSA president Melanie Senter Lubin described crypto schemes as similar to boiler rooms from the past. The difference is that now they locate their victims via email, social media, and websites. During a conference call with reporters, Lubin said, "People are being scammed right and left thinking that they’re buying cryptocurrency.”

She added, “They’re really investing in nothing.”

Lubin, who is also the Securities Commissioner of Maryland, says her office receives many phone calls each week about crypto rip-offs. Crypto-related crimes such as thefts and scams have risen 79% from a year earlier as a result of crypto-related crimes. Scammers are exploiting cryptocurrency's rising popularity and widespread media coverage in order to commit fraud. The majority of fraud threats investors face today pertain to private offerings, which are not subject to federal registration laws.

In 2021, scamming was the main type of cryptocurrency-related crime, followed by theft. Bad actors often promise safe, lucrative, guaranteed returns over relatively short periods.

Pavan A

CBW - External Analyst

INDIA