SEC Chairman Warns Crypto Scams Are on the Rise

SEC Chairman Warns Crypto Scams Are on the Rise

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The Securities and Exchange Commission’s chairman, Gary Gensler, has no special fondness for cryptocurrency. In recent remarks, he attested that crypto amounts to little more than a chance for scammers and fraudsters to transfer money from honest people into their own pockets.

In recent remarks at the Aspen Security Forum, Gensler stated “This asset class is ripe with fraud, scams, and abuses in certain applications.” Gensler pointed out the ways in which scammers can use the digital store of value to engineer complicated online schemes, allowing for fraud that is difficult for regulators to help resolve.

Crypto Is Too New for Regulators

A problem in recent years with crypto has been that it’s so new that there aren’t many laws around it. There’s uncertainty in the regulatory world over who, exactly, is responsible for crypto laws and regulations. If someone falls prey to a crypto scam, do they turn to the SEC? Maybe they need to talk to the FCC since the fraud took place on the internet. It’s impossible to say with certainty, as even the regulators themselves aren’t sure what to do about crypto.

The pace of technology far outstripped the speed with which lawmakers move. “Right now, though … we just don’t have enough investor protection. And frankly at this time, it’s more like the Wild West,” Gensler stated. “I fear that if we don’t address the issues, a lot of people will get hurt.”

The other issue Gensler sees with crypto is that it can allow some criminals to avoid central banking institutions, opening the potential for money laundering. This has led to the suggestion that the SEC could begin regulating cryptocurrency in the same way it currently regulates securities. Such a change would be huge for the currently lawless world of crypto.

Avoiding Scams

The key to avoiding crypto scams is to be smart about how you invest. If you’re looking to add crypto to your investment portfolio, make sure you do your research first. What kind of wallet are you going to use to store the coins? Will you purchase them from private sellers, or do you intend to go through a brokerage firm or Bitcoin exchange?

This research is critical because it’s uncertainty that leads some investors to become defrauded. If you simply send a lot of money to a private citizen and hope to have them send you Bitcoin in return, you might be in for a rough time investing in crypto.