KEY POINTS
- Up to 15 crypto scams are being launched by malicious actors in the crypto sphere every hour
- Between January and November 2022, malicious actors netted $4.3 billion from varous scams in the crypto space
- Gensler: “If something looks too good to be true, sometimes they really are”
Cryptocurrency investors lost a whopping $4.3 billion to scammers in 2022 alone, according to a cybersecurity and data security firm and while many still fall prey to various crypto scams, U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler said identifying a scam is not that hard to spot.
During the Twitter Spaces hosted by the U.S. Army, earlier in January, Gensler talked about the dangers of investing in cryptocurrency and how to tell if a project is a scam.
“If something looks too good to be true, sometimes they really are,” the SEC chief said, adding that “there are certain red flags that you can look for beyond it being too good to be true.”
Gensler enumerated three signs that something could be a scam, which include: if the project could not provide clear documentation on how things work and how it plans to deliver its promises or goals.
The SEC chief also said a project is a scam if it could not show that it complies with regulations and if the project could not explain what it exactly is.
Offers of high returns are also a red flag and Gensler warned investors about investing in extremely complicated projects, as well as the dangers of FOMO or Fear of Missing Out.
“Most [cryptocurrencies] are not complying with the securities laws, but they should be,” Gensler revealed, noting that “It’s the Wild West, I’d say you have to really wonder if there is a ‘there’ there.”
The SEC chief was also joined by SEC commissioner Caroline Crenshaw on Twitter Spaces, who also offered her insights about the world of cryptocurrency.
“It’s important to understand that crypto is novel; it’s speculative,” Crenshaw said, adding that “there are really, really reduced investor protections because most of them have not chosen to come under the SEC remit.”
Commissioner Crenshaw also called for more transparency in the crypto space noting that, “They’re noted for their scams, and they claim to be transparent,” but while “what’s on the blockchain is transparent, [but] the rest of what’s there is not transparent.”
New York-based transaction monitoring and trade surveillance company Solidus Labs said up to 15 crypto scams are being launched by malicious actors in the crypto sphere every hour and while consumers are repeatedly warned about different kinds of scams, these actors devise new ways to attract new victims.
In their round-up of Cryptocurrency Scams of 2022, Privacy Affairs reported a 37% increase in the total amount of crypto funds siphoned by malicious actors from January to November 2022, which netted them $4.3 billion.
Reuters / EVELYN HOCKSTEIN
