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The head of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has issued a dire warning to anybody investing in cryptocurrencies via social media. In a thorough three-part discussion on platform X, Gensler emphasizes the importance of being vigilant in the unstable cryptocurrency market.
Gensler’s first warning is centered on the possibility that cryptocurrency companies are breaking American law, including federal securities laws. It is recommended that investors be aware of the dangers involved in investing in crypto assets, since certain institutions could not follow relevant legislation. Gensler highlights that investors may be deprived of important information and safeguards.
“Investors in crypto asset securities should understand they may be deprived of key info & other important protections in connection w/ their investment.”
The inherent risks and volatility associated with investing in digital assets are the subject of Gensler’s second advice point. Recognizing that cryptocurrency assets are extremely hazardous, Gensler cites cases in which significant platforms and cryptocurrency assets experienced bankruptcy or significant value losses. It is recommended that investors continue to be mindful of the substantial dangers associated with the cryptocurrency market.
“Investments in crypto assets also can be exceptionally risky & are often volatile. A number of major platforms & crypto assets have become insolvent and/or lost value.”
The last and maybe most important cautionary note from Gensler concerns the frequency of fraud and scams in the cryptocurrency space. He draws attention to the way con artists continue to take advantage of the growing demand for cryptocurrency assets, creating schemes aimed at ordinary people. The cryptocurrency industry is still susceptible to a number of dishonest practices, including as fake coin offers, Ponzi and pyramid scams, and outright theft by project developers.
“Fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams. These investments continue to be replete w/ fraud- bogus coin offerings, Ponzi & pyramid schemes, & outright theft where a project promoter disappears w/ investors’ money.”
According to recent statistics from cybersecurity company Scam Sniffer, in 2023, assets worth over $295 million were stolen as a consequence of crypto phishing schemes alone. According to further data from Beosin EagleEye, the total losses in Web3 resulting from phishing scams, rug pulls, and breaches totaled $889.26 million in the third quarter of 2023, with hacks accounting for around 60% of the losses.
With the approval of a spot Bitcoin exchange-traded fund (ETF) awaited with great anticipation by investors, Gensler’s cautions highlight the need of making wise decisions in an ever-complex world of cryptocurrency.