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Crypto Scams Are Biggest Threat to Investors in 2022, Regulators Say

By Suzanne Woolley

Investments tied to cryptocurrencies and digital assets are by far the biggest threats facing individual investors in 2022, according to an annual survey of securities regulators by the North American Securities Administrators Association.

Fraud offerings tied to promissory notes, money scams offered over the internet and social media, and frauds involving self-directed individual retirement accounts filled out the NASAA’s list of the top-four threats to the financial health of retail investors. 

A cryptocurrency mining rig composed of Asus Strix machines operates at the SberBit mining ‘hotel’ in Moscow, Russia, on Saturday, Dec. 9, 2017. Futures on the world’s most popular cryptocurrency surged as much as 26 percent in their debut session on Cboe Global Markets Inc.’s exchange, triggering two temporary trading halts designed to calm the market. Photographer: Andrey Rudakov/Bloomberg

“Before you jump into the crypto craze, be mindful that cryptocurrencies and other related financial products may be nothing more than public facing fronts for Ponzi schemes and other frauds,” Joseph Rotunda, Texas State Securities Board Enforcement Division director, said in a statement. 

Investors should view investments in cryptocurrency trading programs, crypto mining pools, crypto depository accounts and securitized tokens “for what they are: extremely risky speculation with a high risk of loss,” said Rotunda. 

Fraudsters target a different crowd — many senior citizens and retirees living on fixed incomes — with fraudulent short-term promissory notes, making it the second-biggest threat to investors, according to the NASAA survey. “Guarantees of returns around 2% a day, 14% a week or 40% a month are too good to be true,” the NASAA release on Monday said.

Investors should be particularly cautious about promissory notes with terms of nine months or less, the NASAA said, since such notes generally don’t have to be registered with federal or state securities regulators.

More stories like this are available on bloomberg.com

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