The cryptocurrency industry is booming with more people getting involved in it everyday. However, fraudsters are utilizing this opportunity to swindle the newbies.
As a result of this, the education department of the US Securities and Exchange Commission released an investor alert to briefly educate investors on how to carefully invest in crypto.
The Commission cautioned investors not to invest their money, because of the Fear of Missing Out (FOMO), in a project they have neither assessed nor understood. It encouraged investors to carry out thorough research in order not to be defrauded.
The Commission noted a few red flags with which the investors can accurately discern a good investment opportunity from a dubious one. But the central advice is that investors shouldn’t fund an opportunity that’s “too good to be true.”
“If an investment “opportunity” sounds too good to be true, it probably is. Remember that the potential for high investment returns usually involves high risk,” the release reads.
As an example, the Commission recounted a recent lawsuit it’s having with one Bitconnect – a Bitcoin-related Ponzi scheme. Bitconnect, according to the SEC statement, tricked people into investing in it; claiming its trading with bots.
Eventually, Bitconnect defrauded people of 325,000 Bitcoin which is worth over $2 billion. The case is still in Court as of press time. This, among other reasons, is why the SEC found crypto investment to be timely at the moment.