New York Attorney General issues new warning to cryptocurrency investors
AttorÂney GenÂerÂal LetiÂtia James issued an “alert” on June 2 warnÂing New YorkÂers about the danÂgers of investÂing in cryptocurrencies.
The mesÂsage comes as crypÂto marÂkets conÂtinÂue reelÂing from the reperÂcusÂsions of the TerÂra imploÂsion. In May, the total crypÂto marÂket cap shrunk by $446 bilÂlion, markÂing an eleven-month low for the sector.
James took the opporÂtuÂniÂty to issue a fresh warnÂing to investors, sayÂing digÂiÂtal assets are among the riskiÂest investÂments on the market.
“CrypÂtocurÂrenÂcies are subÂject to extreme and unpreÂdictably high price swings that make them among the most high-risk investÂments on the market.”
Not James’ first rodeo
The last time AttorÂney GenÂerÂal James issued a simÂiÂlar warnÂing was in March 2021, as senÂtiÂment was spikÂing due to BitÂcoin ralÂlyÂing to new all-time highs. HowÂevÂer, the mesÂsage then had a more sigÂnifÂiÂcant indusÂtry focus.
She informed the New York crypÂto indusÂtry memÂbers that they would be shut down if they didn’t “play by the rules.”
“We’re sendÂing a clear mesÂsage to the entire indusÂtry that you either play by the rules or we will shut you down.”
SpecifÂiÂcalÂly, James referred to state regÂuÂlaÂtoÂry requireÂments to regÂisÂter with the Office of the AttorÂney General’s Investor ProÂtecÂtion Bureau. She said that obligÂatÂed parÂties who fail to comÂply would be subÂject to civÂil and crimÂiÂnal enforcement.
Her mesÂsage was clear, the NY Attorney’s Office is clampÂing down on greedy crypÂto firms “who take unnecÂesÂsary risks with investors’ money.”
“Too often, greedy indusÂtry playÂers take unnecÂesÂsary risks with investors’ monÂey, but, today, we’re levÂelÂing the playÂing field and issuÂing alerts to both investors and indusÂtry memÂbers across the nation”
Retail cryptocurrency investors beware
But now, James seeks to cauÂtion retail investors, sayÂing putting monÂey into crypÂtocurÂrenÂcy investÂments “can yield more anxÂiÂety than fortune.”
“Too often, crypÂtocurÂrenÂcy investÂments creÂate more pain than gain for investors. I urge New YorkÂers to be cauÂtious before putting their hard-earned monÂey in risky crypÂtocurÂrenÂcy investÂments that can yield more anxÂiÂety than fortune.”
In the press release, James menÂtioned sevÂen speÂcifÂic areas to be aware of regardÂing digÂiÂtal asset investÂing. They were:
- HighÂly SpecÂuÂlaÂtive and UnpreÂdictable ValÂue — high volatilÂiÂty and easy price manipÂuÂlaÂtion, e.g., via social media.
- DifÂfiÂculÂty CashÂing Out InvestÂments — no guarÂanÂtees around exitÂing into cash, espeÂcialÂly durÂing times of high marÂket volatilÂiÂty and exchange restrictions/platform crashes.
- HighÂer TransÂacÂtion Costs — variÂable fees due to netÂwork activÂiÂty and size of transactions.
- UnstaÂble “StaÂbleÂcoins” — although not explicÂitÂly statÂed, refÂerÂences TerÂra UST and vulÂnerÂaÂble pegÂging mechÂaÂnisms and dubiÂous claims around reserves backÂing parÂticÂuÂlar stablecoins.
- HidÂden TradÂing Costs — bot-driÂven marÂkets designed to manipÂuÂlate prices.
- ConÂflicts of InterÂest — CrypÂtocurÂrenÂcy tradÂing platÂforms may have interÂests conÂtrary to their customers.
- LimÂitÂed OverÂsight — the indusÂtry has no fedÂerÂalÂly regÂuÂlatÂed exchange, and platÂforms operÂatÂing in this space lack genÂerÂal overÂsight. As such, vicÂtims of fraud may have no recourse.