The US Securities and Exchange Commission (SEC) has warned investors against investing in digital assets due to the high risk of fraud and the associated “devastating losses.”
According to the SEC’s Investor Education and Protection Office and the Retail Strategy Task Force:
“Fraudsters continue to use the growing popularity of digital assets to lure retail investors. Investors may be less skeptical about investment opportunities associated with something new or ‘cutting edge’, or they may be embraced by the FOMO.”
The regulator has urged investors to pay special attention to warning signs:
- Promises of high yields.
- Unclear license status.
- Fake reviews.
The watchdog has cited BitConnect as an example. We should remember that in 2018, the project was accused of creating a financial pyramid. At the peak of its popularity, the price of the project’s native coin surpassed $500 and was in the top ten of CoinMarketCap’s ranking.
In September 2021, the former BitConnect director and promoter Glenn Arcaro pleaded guilty to conspiring with other participants in the scheme to defraud investors.