NASAA Warns Against Cryptocurrency Investment Threats in 2020

Cryptocurrency investment is among the top five investor threats for 2020 according to NASAA. The regulator urges investors to make a resolution to protect their money before ringing in the New Year.

24 December 2019 | AtoZ Markets – The North American Securities Administrators Association (NASAA) yesterday released its annual list of financial products that threaten to trap investors, identifying the most frequent sources of current complaints or industry investigations.

NASAA warns against crypto and Ponzi schemes

While the 2020 catalog includes many long-standing threats, it also features emerging vehicles such as cryptocurrency. The watchdog describes cryptos as one of the greatest risks to investors this year based on investor complaints.

The report lists the top five threats that investors are likely to see in 2020 which includes promissory notes and Ponzi schemes. The threats also include real estate investments, cryptocurrency-related investments, and social media/Internet-based investment schemes.

Many of the traps identified by NASAA promise high returns. Nevertheless, they provide little if any disclosure of risks and offer high commissions to aggressive sales practices. Christopher Gerold, NASAA president, and chief of the New Jersey Bureau of Securities said:

“Anyone who says their investment offer has no risk is lying. No one can guarantee an investment return.”

The regulator has put the phenomenon of a crypto craze at the top of its investment scams list. NASAA highlighted that cryptocurrencies and related financial products may be nothing more than Ponzi schemes and other frauds. As such, it advises investors to screen themselves from crypto promotions that fail to offer clear disclosures of their risks and costs.

“Because these products do not fall neatly into the existing federal/state regulatory framework, it may be easier for the promoters of these products to fleece you.”

NASAA continues crypto crackdown

NASAA was also concerned that scammers have immediate access to potential victims through their online profiles. From there, fraudsters may obtain sensitive personal information. As such, con artists can easily lure people and promote fraudulent investment products using a highly targeted pitch.

During NASAA’s 2018 fiscal year, the agency’s enforcement actions secured more than $1 billion in restitution, disgorgement, and penalties. Out of this figure, more than $558 million returned to investors million while $490 million in fines were handed over to the regulators.

The NASAA revealed that more than 130 new cryptocurrency-related cases are being actively investigated. Meanwhile, 35 enforcement actions already taken since the beginning of 2019. By mid-2018, the NASAA launched an ongoing coordinated regulatory initiative called Operation Cryptosweep.

At that time, more than 40 state and provincial securities regulators in the United States and Canada launched their coordinated enforcement sweep of the ICO market.

“Before you ring in the New Year, make a resolution to protect your money from fraudulent investments and those who may be trying to fleece you,” Gerold concluded.

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