When It Comes To Crypto, It’s Buyer Beware

The Consumer Financial Protection Bureau has received a cascade of complaints about crypto. Romance scams, thefts, frauds, account hacks, etc. CFPB says it has received over 8,000 crypto complaints over the past four years. And there aren’t many places consumers can turn to.

Most complaints relate to fraud, according to the CFPB. Including “pig butcher”, a romance scam where hackers gain the trust of victims, create crypto accounts, and then empty them. You can scroll through complaints on the CFPB website.

Here’s an example: “All my funds are gone.” “The mining page was a fraudulent mirror page from another company. It was a scam.” “I wired some money to someone who was going to invest it in crypto…it was transferred to bitcoin and then transferred to their crypto wallet. Please help. I am devastated.”

But, at this stage, the government cannot do much. There just aren’t many regulations covering crypto investments. Buyer beware right now, said Mark Hays of the nonpartisan consumer group Americans for Financial Reform.

“These products are basically provided as a speculative investment opportunity,” he said. “And consumers should know that.”

But some current regulations should be extended to cover crypto businesses, Hays added. “If they provide banking-like products, like deposits or accounts, they should be regulated like banks.”

Some companies in the crypto space say they are open to more regulation. However, different regulations are needed for unique crypto products such as NFTs, said Farooq Malik, CEO of Rain, a software company that moves crypto to corporate credit cards.

In the meantime, crypto consumers should educate themselves and take charge of their own funds, he said. “What this means is that you have a wallet that sits on the blockchain. You can hold your own assets in the wallet and your blockchain.

When you rely on third parties to move your crypto, Malik said, you open yourself up to all sorts of scams.

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