The U.S. Securities and Exchange Commission (SEC) has warned about scammers exploiting investors’ fear of missing out (FOMO) on social media. “If a crypto investment ‘opportunity’ sounds too good to be true, it probably is,” the SEC cautioned.
SEC Discloses that Scammers Use Social Media To Defraud Investors
The U.S. Securities and Exchange Commission (SEC) published an Investor Alert titled “Social Media and Investment Fraud” Monday.
The SEC’s Office of Investor Education and Advocacy warned that “fraudsters often use social media to scam investors.” Encouraging investors to be skeptical and “never make investment decisions based solely on information from social media platforms or apps,” the securities regulator described:
Fraudsters may exploit investors’ fear of missing out to lure investors on social media into ‘crypto’ investment scams.
“If a crypto investment ‘opportunity’ sounds too good to be true, it probably is,” the SEC stressed. “Promises of high investment returns, with little or no risk, are classic warning signs of fraud.”
As a lure to investors, scammers may post faked historical returns on websites that claim high returns for investment.
Anyone considering investing in crypto assets or any crypto-related investments should “take the time to understand how the investment works,” the securities watchdog advised. “Check out the background (including license and registration status) of anyone offering you an investment in securities using the search tool on Investor.gov.”
The SEC is not the only U.S. regulator to warn about crypto-scams. Recently, authorities warned of the “pig butchering” cryptocurrency scam becoming alarmingly popular. Crypto investors were also warned by the Federal Bureau of Investigations (FBI) not to succumb to the liquidity mining scam.
Chainalysis blockchain analytics company reported that illicit cryptocurrency volumes fell 15% over the past year. Specifically, “Total scam revenue for 2022 currently sits at $1.6 billion, 65% lower than where it was through the end of July in 2021, and this decline appears linked to declining prices across different currencies,” the firm noted.
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