Securities Regulators: Crypto Scams are Top Threat to Investors ‘By Far’

Cryptocurrencies and digital assets are the biggest threat to investors, according to new data from the North American Securities Administrators Association (NASAA).

The annual survey by the nonprofit association of regulators in the U.S., Canada and Mexico urged investors to be cautious when buying cryptocurrency and digital assets.

“The most common telltale sign of an investment scam is an offer of guaranteed high returns with no risk,” said NASAA President Melanie Senter Lubin in a statement. “The best defense is education and information are an investor’s best defense against investment fraud.”

Raiders set a record last year with $14 billion in cryptocurrency thefts as a result of the rise of decentralized finance (DeFi) platforms, according to Chainalysis’ blog, the New York-based blockchain analytics research company.

Researchers used data from North American securities regulators to identify the most problematic products, practices or schemes. Among the most cited scams include fraud offerings related to promissory notes; money scams available through social media and internet investment offers; and financial schemes connected to self-directed Individual Retirement Accounts.

In a warning to investors, NASAA said scammers are spoofing websites and using phony social media accounts to hide their identities. The trade group recommended investors should identify phony accounts by examining content, analyzing dates of inception and considering the quality of engagement. Among the recommendations are to beware of fake client reviews and if it sounds too good to be true, it probably is.

The report came just days after PYMNTS reported Pakistan regulators are investigating Binance, a popular cryptocurrency exchange, for a multi-million-dollar Ponzi scheme.

The Federal Investigation Agency (FIA) Cyber Crime Wing has issued a notice to the company. Many online investment frauds are operating in Pakistan, where investors are promised a high rate of return if they signed up additional clients, the report stated.

Read more: Report: Binance Faces Scrutiny as Ponzi Mobile Apps Scam Surfaces