New York Attorney General Letitia James is warning that cryptocurrencies are high-risk and unstable, and she has called for investors to use “extreme caution” when trading.
Investments in virtual assets are subject to speculative bubbles, James tweeted, saying the current speculative crypto bubble has the potential to lead to “devastating losses” if it bursts.
Because of an absence of central, comprehensively-regulated exchanges, James warned that people targeted by fraudsters may have no recourse or help from law enforcement in the state, Coin Telegraph reported.
She warned brokers, dealers and advisors of the possibility of facing “both civil and criminal liability” for unauthorized businesses and those trying to take illegal advantage of the current crypto craze.
“Many operators of virtual currency trading platforms are themselves heavily invested in virtual currencies, and trade on their own platforms without oversight,” James said in a press statement.
She tweeted, “There are extreme risks in investing in virtual or cryptocurrencies and it’s imperative that we act to protect investors’ wallets. I’m warning New Yorkers and investors across the country that investing in this unstable market is not prudent and could cause devastating losses.”
James later added to the thread, “Let this also serve as a warning to those facilitating these trades: If you don’t play by the rules, we will not hesitate to shut down your operations.”
Online, some disagreed with James’ perception of the industry. Mark Jeffrey, founder of personal safety app Guardian Circle, tweeted about the acceptance of crypto trading, “This tweet is incredibly backwards and out of step with reality. Goldman Sachs just restarted its crypto trading desk TODAY and CITI is now speculating that BTC could become the world trading currency of choice.”
Another Twitter user agreed that James is not up on the industry. “Miss, it’s the most appreciating asset of all human history. And it happened in your life time, on your watch. You don’t think that’s worth spending some time understanding?”
Added another, “The big banks have long known this was the future and have been accumulating $BTC and other $crypto assets for years. Limiting competition by using government to exclude a huge portion of retail investors is a classic example of regulatory capture.”
James appears to determined to fight against abuses in the industry.
“Too often, greedy industry players take unnecessary risks with investors’ money,” James said in an investors’ alert. “All investors should proceed with extreme caution when investing in virtual currencies. Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains.”
Interest in cryptocurrencies is growing. Earlier this month, bitcoin rose to a new all-time high above $58,000, after gaining attention from Wall Street banks, Tesla, and even the U.S. government, CNBC reported.
James, a Democrat, has been taking actions to police the industry.
On Feb. 17, James announced a lawsuit against cryptocurrency trading platform Coinseed for allegedly defrauding investors out of more than $1 million via undisclosed fees, Business Insider reported. The lawsuit centers around the sale of what she called “worthless” tokens.
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Also, New York’s State’s top law enforcer halted the illegal activities of both crypto firms Bitfinex and Tether in New York. She recently reached a settlement with Tether and Bitfinex over allegations that they covered up $850 million of losses. In the landmark case, both firms agreed to pay an $18.5 million fine but denied any wrongdoing, CNBC reported.
James’ most recent statement was accompanied by five warning signs of investment fraud as well as a link to a complaint form.
She reminded members of the crypto industry in New York that they must be registered with the Office of the Attorney General’s Investor Protection Bureau.
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