Regulators around the world are stepping up their efforts to better inform the public about the crypto space as can be seen with the recent announcements emanating from the United States and Venezuela.
In the United States, the Securities and Exchange commission (SEC) published a fresh warning about crypto-related investment scams warning the public that they could suffer “devastating losses.”
According to the SEC, the increased popularity of initial coin offerings plus the growth of the crypto industry has played a role in the rise of crypto scams in the country.
The financial regulator continued that the fear of missing out (FOMO) among investors has been a key factor used by the scammers to lure their victims. “Investors may be less skeptical of investment opportunities that involve something new or ‘cutting-edge,’ or may get caught up in the fear of missing out (FOMO).”
SEC went on to highlight the BitConnect scam as an example of one such scam that “allegedly paid investor withdrawals out of incoming investor funds and did not trade investors’ Bitcoin consistent with its representations, leading the platform to collapse and investors to lose massive amounts of money.”
The SEC advised investors to carry out proper research about the risks and opportunities attached to each investment opportunity before investing in it and that they should particularly look out for schemes that promise high returns.
Regulators in Venezuela also towed the US SEC path as they warned their citizens to take proactive measures against being a victim of crypto scams.
The regulators wrote, “We inform the community to avoid being victims of scams through the homeland system with false managers who only seek their own profit.”
It continued that users should handle their accounts themselves and should avoid the use of third-party managers, citing the example of a case where a man reportedly faked his kidnapping to steal over a million dollars from his customers.