FOMO of investors regarding the rise in prices of some crypto assets in the past 2 years can lead them to scams. A warning about fraudulent investment schemes involving crypto has been issued by the US Securities and Exchange Commission (SEC).
As the popularity of crypto increases the number of scams is also increasing. The governments of different countries are trying to protect its citizen from such scams. The SEC of the US has issued an alert regarding the Fraudulent investment schemes involving crypto.
FOMO of investors is main reason of frauds:
The Officer of Investor Education and Advocacy (OIEA) and Division of Enforcement’s Retail Strategy Task Force, Both of SEC, have issued an Investor Alert on Investment involving crypto. The alert said that a lot of heavy losses are being caused to retail investors by using the rising popularity of crypto assets. FOMO of investors is the main cause. Alert notice further said:
Some investors may have FOMO [fear of missing out], given the rise in the price of some digital assets in recent years, that they will miss an opportunity to become very wealthy.
‘Guaranteed high investment returns’ and ‘with little or no risk’ can be seen as a classic warning sign of fraud. Bogus historical data which shows high returns on investment can be shown to lure the investors.
Usually, fabrication of investment returns and fake testimony is provided by the unlicensed sellers to entice the retailer. The SEC also warned that “If an investment ‘opportunity’ sounds too good to be true, it probably is.”
Although these instructions and signs are from the US SEC, everyone must keep them in mind to avoid such situations. For more related material please click here.