Gary Gensler, the 33rd Chair of the U.S. Securities and Exchange Commission (SEC) is issuing a warning to crypto investors.
In a three-part thread on the social media platform X, Gensler offers Americans his thoughts on the crypto space.
In his statement, Gensler raises three points, telling investors that crypto institutions may not be in compliance with US law and that investing in digital assets is inherently risky.
“Those offering crypto asset investments/services may not be complying w/ applicable law, including federal securities laws. Investors in crypto asset securities should understand they may be deprived of key info & other important protections in connection w/ their investment.
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. Investments in crypto assets continue to be subject to significant risk.”
The SEC Chair also points out that the crypto space is fraught with scams and bad actors.
“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.”
Crypto phishing scams alone facilitated the theft of more than $295 million worth of assets in 2023, according to the cybersecurity firm Scam Sniffer.
In the July to September 2023 quarter, the “total losses from hacks, phishing scams, and rug pulls in Web3 reached $889.26 million” with hacks or major attacks constituting about 60% of the losses, according to Beosin EagleEye.
Gensler’s warning comes as crypto investors anticipate the approval of a spot Bitcoin exchange-traded fund (ETF) which could reportedly happen this week, according to Fox Business.
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