NASAA opens investigations into rise of crypto-related fraud


In the wake of regulators noticing a rise in potential crypto-related frauds, the North American Securities Administrators Association (NASAA) has opened probes into questionable cryptocurrency-related investment offerings.

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NASAA officials said the 130 new investigations are in addition to 35 pending or completed enforcement actions since the beginning of this year.

“Recent headlines of potentially new cryptocurrency products and the near tripling in value of some cryptocurrencies and the sharp increase in market capitalization for all cryptocurrencies are again creating an environment that attracts white-collar criminals, bad actors, and other promoters of illegal and fraudulent securities schemes,” Michael S. Pieciak, NASAA president and Vermont Commissioner of Financial Regulation, said. “Investors should be mindful of the hype and be aware of the risks when considering whether to jump into cryptocurrency-related investment products.”

The NASAA said among the factors to be considered to address potential fraudulent activity are volatility. Cryptocurrency markets are highly volatile, making them unsuitable for most investors looking to meet long-term savings or retirement goals; cryptocurrency and many crypto-related investments are subject to little regulatory oversight, and there may be no recourse should the cryptocurrency disappear due to fraud or a cybersecurity breach; and cryptocurrency or crypto-related investments only exist on the internet – and issuers can be located anywhere in the world, so it may be impossible to trace and recover lost funds through the courts.

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