Major Investment Threat: NASAA Bashes Cryptocurrencies

January 3, 2020   Bitcoin

Even though the responsible part of the global crypto community is going above and beyond in its effort to improve the image of cryptocurrencies among the general public and investors alike, various influential individuals and organizations are relentlessly insisting that cryptographic tokens pose a significant danger.

The North American Securities Administrators Association (NASAA) published a list of five biggest threats for nascent investors, which had been drawn up by the group of security regulators who work with the Enforcement Division within this organization. Cryptocurrencies, and the associated investment vehicles, were named the greatest financial menaces in the coming year.

We are here to warn you

The report, which was released on December 23, states that the compilers arrived at the corresponding conclusions after having interviewed numerous members of NASAA, as well as the representatives of national and regional securities regulators, which operate in such countries as Mexico, Canada, and the United States.

According to Christopher Gerold, the President of this organization and the Head of the Bureau of Securities in the state of New Jersey, the primary purpose of making a list was to provide investors with better insights into the pitfalls of this business and help them to secure the financial assets in the new year better. The main rule of thumb, he said, is to never buy into offers that promise high, fast, and, most importantly, guaranteed returns on the initial investment. This constitutes an outstanding feature of all scams and shady projects, especially if they are “seasoned” with an imposed sense of urgency, which is often realized through a limited time offer.

He also warned about the risks of devoting money to private offerings that don’t comply with the requirements of federal agencies that regulate the market of securities.

Crypto features in two threats on the list

Cryptocurrencies topped the list, though they weren’t singled out but placed under the category of unregistered products and unlicensed salesmen. As we all know, crypto is struggling to gain legal recognition in the United States, which significantly hampers its attractiveness to local investors. Therefore, the absence of a proper securities license, which many firms that work with crypto can’t have a priori, was classified as a major red flag by NASAA.

Digital currencies also featured in another section of that list - Ponzi schemes. Unfortunately, even the most die-hard adherents of cryptocurrencies can’t argue the fact that this space is still riddled with such pyramid scams that beguile billions of dollars from gullible investors and inflict serious damage upon the reputation of blockchain startups and cryptocurrencies in general. According to the latest stats, the passing year saw a major spike in fraud associated with cryptocurrencies, even compared to last year’s figures. Whereas in 2018, crypto holders lost $1.7 to scams and Ponzies, over the course of this year, the numbers have skyrocketed to $4.4 billion, with $2.9 billion being defrauded through the infamous PlusToken scheme.

It must be mentioned that NASAA has initiated a task force called Operation Cryptosweep, which involved 200 investigators monitoring the crypto market for potential scams. As for the other investor threats, the organization designated them as promissory notes as well as investments in real estate and oil/gas enterprises.

Author: Alex Paulson for

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