The US Securities and Exchange Commission (SEC) has warned of fraudsters exploiting investors’ fear of missing out (FOMO) on social media. “Crypto investment ‘opportunity’ may turn out to be true if it turns out to be too smart,” the SEC warned.
The SEC says fraudsters often use social media to scam investors
The US Securities and Exchange Commission (SEC) has published a Capitalist Alert titled “Social Media and Investment Fraud.”
“Fraudsters often use social media to defraud investors,” warns the SEC’s Office of Capital Education and Advocacy. Investors should be encouraged to be skeptical and “never base investment choices on information obtained primarily from social media platforms or apps,” the securities regulator said.
Fraudsters can use investor anxiety on social media to lure investors into ‘crypto’ investment scams.
“If a crypto investment ‘opportunity’ turns out to be too smart, it could be true,” the SEC emphasized. “Promises of high investment returns, with little or no risk, are warning signs of fraud.”
An easy way for scammers to lure investors into their schemes is to post unrealistic historical returns on their websites that show high investment returns.
Anyone considering financing in crypto assets or any crypto-related investments should take the time to find out if the investment will work, the security watchdog suggested. “Check the background (including licensing and registration status) of anyone offering you an investment in a security exploit with the search tool at capitalist.gov.”
In addition to the SEC, many different US regulators have warned about cryptocurrency fraud. Recently, authorities have warned of a “pork killing” cryptocurrency scam that is becoming alarmingly popular. The Federal Bureau of Investigation (FBI) jointly recently warned crypto investors against falling for liquid mining scams.
According to blockchain analytics firm Chainalysis, illegal crypto volumes have decreased by 15 percent in the first six months of this year compared to last year. Notably, “Total fraud revenue for 2022 is now set at $1.6 billion, down 65 percent from July 2021, and this decline appears to be driven entirely by spending on multiple currencies,” the firm said.
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