North American Securities Administrators Association Calls Cryptocurrencies “Top Investor Threat” in 2020

The North American Securities Administrators Association (NASAA) has identified cryptocurrencies as one of “the top five products or schemes likely to trap investors in the coming year.”

NASAA, “represents state and provincial securities regulators in the United States, Canada, and Mexico,” and has, “a multifaceted mission of protecting investors from fraud and abuse, conducting investor education, providing guidance and assistance via the established regulatory framework, and ultimately helping power the North American economy by ensuring the integrity of the financial markets.”

The other four financial products in the NASAA’s list are promissory notes, ponzi/pyramid schemes, real estate investments, and social media/Internet investment frauds.

The list was assembled, “Based on investor complaints, ongoing investigations and current enforcement trends.”

According to the NASAA, “Each year, investors lose billions of dollars to investment fraud…(and) face increasingly complex and confusing scams.”

In addition to being a seemingly complex technological product, cryptocurrencies have been heavily promoted via content displaying the apparently lavish lifestyles of crypto-rich individuals. Stories of people who lost money have been mostly ignored:

“Cryptocurrencies burst into the investing mainstream in 2017 as the values of some virtual coins and tokens skyrocketed, led by Bitcoin…Stories of ‘crypto millionaires’ attracted some investors to try their hand at investing in cryptocurrencies or crypto-related investments. But stories of those who bet big and lost also began appearing and continue to appear.”

NASAA warns that a cryptocurrency scheme may be just a scam with a new guise:

“Before you jump into the crypto craze, be mindful that cryptocurrencies and related financial products may be nothing more than public facing fronts for Ponzi schemes and other frauds.”

The regulator also warns that existing laws may not adequately protect consumers or assure recourse in the event of a rip off:

“(B)ecause 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. Investing in cryptocurrencies and related financial products accordingly should be seen for what it is: extremely risky speculation with a high risk of loss.”

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