SEC Chair Warns Crypto Investors Against Rising “Fraudsters”

Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC) has doubled down on his market and crypto-safety campaign with a new series of messages targeting retail investors in the country’s digital currency ecosystem.

The Gary Gensler Crypto Warning

As contained in the X post, Gary Gensler said some of those offering crypto asset investments and services may not comply with all applicable regulations like the Federal Securities Laws. 

The top regulator noted that investors eyeing engagement with cryptocurrencies may not gain access to the most essential information that might offer them the right protection in line with their investments. This might prove to be detrimental as market players in the mainstream financial ecosystem typically make their investment decisions based on details made available by product issuers in compliance with SEC guidelines.

The skepticism that crypto players may not be so amenable to existing laws. Riding on this, Gary Gensler noted that investments in crypto assets are exceptionally risky and can be volatile. Taking his more than 313.1K followers down memory lane, the SEC Chair mentioned that many crypto companies have become insolvent with major loss of value.

This analogy brings to mind the collapse of major players like Voyager Digital and FTX Derivatives Exchange. Over the past few years, at least 5 top crypto lending firms and trading platforms have gone bankrupt, locking up funds from investors alongside them. 

The Rise of Crypto Fraudsters

In his concluding post, Gary Gensler noted that fraudsters operating in the digital currency ecosystem are beginning to proliferate, riding on the “rising popularity of crypto assets to lure retail investors into scams.”

Gary Gensler pointed out that these investment offerings are typically paraded as bogus coin offerings, Ponzi and Pyramid Schemes, and outright theft characters as “rug pulls.” In reality, the industry continues to be plagued by these scams with one recent occurrence involving the exploitation of Coinspaid exchange for more than $6 million.

The SEC has been doing a lot of investor sensitization in recent times, another move that suggests the regulator might be in the last stages of giving approvals for close to the dozen spot Bitcoin ETF products ready for launch. Current permutations hold that the regulator plans to manage investor’s enthusiasm before the product will finally be approved