SEC’s Investor Alert on crypto asset securities scams and compare them with scams involving fiat money:

Crypto Asset Securities Scams:

Innovations and New Technologies: Fraudsters exploit the popularity of crypto assets (such as cryptocurrencies, coins, and tokens) to lure retail investors into scams.

Communication Channels: They often initiate contact through social media platforms or unsolicited text messages, pretending to be old friends or accidentally contacting the victim.

Building Trust: Fraudsters establish online relationships, claiming knowledge of lucrative investment opportunities related to crypto assets. They may even direct victims to fake websites or apps.

Investment Requests: Victims are convinced to invest larger sums of money, and when they want to withdraw funds, the fraudsters create excuses or demand additional fees1.

Fiat Money Scams:

Government-Issued Currency: Fiat money (like the US Dollar, Euro, British Pound, and Yen) is backed by the government that issued it and isn’t tied to a commodity like gold.

Trust-Based Value: Fiat money derives its value from people’s trust in the authorities that issue it.

History: Fiat money originated in China during the 10th century and spread globally. It’s widely used today for everyday transactions.

Advantages: Fiat money allows for efficient transactions, but its value can erode due to aggressive monetary policies2.

SEC’s Intentions:

The SEC aims to prevent fraud, reduce market manipulation, and force more disclosure from crypto holders and exchanges.

The agency has taken enforcement actions against crypto actors, considering the industry “rife with abuse.”

SEC Chair Gary Gensler has called for certain crypto exchanges to register as securities trading platforms3.

ON X 🐦

@SECGov