The U.S. Securities and Exchange Commission (SEC) has warned against scammers exploiting investors’ fear of missing out (FOMO) on social media. “If a crypto investment ‘opportunity’ sounds too good to be true, it probably is,” the SEC warned.
SEC says scammers often use social media to defraud investors
The U.S. Securities and Exchange Commission (SEC) on Monday issued an investor alert titled “Social Media and Investment Fraud.”
The SEC’s Office of Investor Education and Advocacy has warned that “fraudsters often use social media to scam investors.” Encouraging investors to be skeptical and “never make investment decisions based solely on information from social media platforms or apps,” the securities regulator described:
Fraudsters can exploit investors’ fear of missing out to lure social media investors into “crypto” investment scams.
“If a crypto investment ‘opportunity’ sounds too good to be true, it probably is,” the SEC pointed out. “Promises of high returns on investment, with little or no risk, are classic warning signs of fraud.”
Fraudsters may also post fabricated historical returns on their websites showing high investment returns as a way to lure investors into their schemes.
Anyone considering investing in crypto assets or any crypto-related investment should “take the time to understand how investing works,” the securities watchdog advised. “See the background (including license and registration status) of anyone offering you a securities investment using the search tool on Investor.gov.”
Besides the SEC, several other US regulators have warned against cryptocurrency scams. Recently, authorities warned of the alarming popularity of the “pig butcher” cryptocurrency scam. The Federal Bureau of Investigation (FBI) also recently warned crypto investors not to fall for the cash mining scam.
According to blockchain analytics firm Chainalysis, illicit crypto volumes were down 15% in the first six months of this year, compared to the previous year. Specifically, “total scam revenue for 2022 currently sits at $1.6 billion, down 65% from the end of July 2021, and this decline appears to be related to lower prices in various currencies.” , the company noted.
What do you think of the SEC’s crypto investment scam warning? Let us know in the comments section below.
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