EU Financial Regulators Warn Consumers on the risks of Crypto-assets
The EU Financial Regulators have issued a warning about the dangers of investing in cryptocurrencies. The European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority released a joint press statement on Thursday warning consumers about the dangers of the emerging asset class.
“Consumers face the very real possibility of losing all their invested money if they buy these assets,” the EU’s three financial watchdogs said. The warning was prompted by the growing investor interest in crypto and the aggressive promotion of cryptocurrencies and related products via social media and influencers. Cryptocurrencies are highly risky, speculative, and “not suited for most retail consumers as an investment or as a means of payment or exchange,” the regulators added.
The warning contains a checklist of the top dangers that regulators say investors should be aware of before investing in cryptocurrency. The authorities’ main worries in the statement were extreme volatility, misleading information, a lack of consumer protection, fraud, hacking, and market manipulation.
The EU Financial Regulators’ warning comes as the amount of cryptocurrency market fraud, theft, and deceptive advertising reaches unprecedented heights. Scammers took home a record $14 billion in cryptocurrency in 2021, according to the latest crypto crime report from blockchain analytics firm Chainalysis.
There are numerous examples of celebrity and influencer-endorsed pump-and-dump schemes. In January, for example, a group of investors sued popular TV personality Kim Kardashian and world champion boxer Floyd Mayweather for making “false or misleading promises” and pushing the EthereumMax project, whose coin has since dropped by 97.8%.
Many crypto-native influencers, well-known in the crypto world but less so outside of it, have been caught pushing fraudulent enterprises that later vanished without a trace or “pulled the rug” from their investors. Influencers are frequently paid to promote projects, however, some have been caught conducting paid promotions on their social media channels without disclosing it (such behavior violates securities laws in the United States).
Since the technology’s rise to prominence, the NFT area has become a great opportunity breeding ground for scammers. Many projects have been criticized for asking huge fees for NFTs, scamming investors, and failing to deliver on their claims.
One of the most recent scandals involves the Pixelmon project, which obtained $70 million in funding from investors following extensive marketing but was eventually accused of producing subpar artwork. Following the reveal, Pixelmon issued an apology, and the collection was mocked in the community.
Before investing in cryptocurrencies, the EU Financial Regulators prompted consumers to first consider whether they could afford to lose all their invested money, warning that they’re “unlikely to have any rights to protection or compensation if things go wrong.”
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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EU Financial Regulators Warn Consumers on the risks of Crypto-assets
The EU Financial Regulators have issued a warning about the dangers of investing in cryptocurrencies. The European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority released a joint press statement on Thursday warning consumers about the dangers of the emerging asset class.
“Consumers face the very real possibility of losing all their invested money if they buy these assets,” the EU’s three financial watchdogs said. The warning was prompted by the growing investor interest in crypto and the aggressive promotion of cryptocurrencies and related products via social media and influencers. Cryptocurrencies are highly risky, speculative, and “not suited for most retail consumers as an investment or as a means of payment or exchange,” the regulators added.
The warning contains a checklist of the top dangers that regulators say investors should be aware of before investing in cryptocurrency. The authorities’ main worries in the statement were extreme volatility, misleading information, a lack of consumer protection, fraud, hacking, and market manipulation.
The EU Financial Regulators’ warning comes as the amount of cryptocurrency market fraud, theft, and deceptive advertising reaches unprecedented heights. Scammers took home a record $14 billion in cryptocurrency in 2021, according to the latest crypto crime report from blockchain analytics firm Chainalysis.
There are numerous examples of celebrity and influencer-endorsed pump-and-dump schemes. In January, for example, a group of investors sued popular TV personality Kim Kardashian and world champion boxer Floyd Mayweather for making “false or misleading promises” and pushing the EthereumMax project, whose coin has since dropped by 97.8%.
Many crypto-native influencers, well-known in the crypto world but less so outside of it, have been caught pushing fraudulent enterprises that later vanished without a trace or “pulled the rug” from their investors. Influencers are frequently paid to promote projects, however, some have been caught conducting paid promotions on their social media channels without disclosing it (such behavior violates securities laws in the United States).
Since the technology’s rise to prominence, the NFT area has become a great opportunity breeding ground for scammers. Many projects have been criticized for asking huge fees for NFTs, scamming investors, and failing to deliver on their claims.
One of the most recent scandals involves the Pixelmon project, which obtained $70 million in funding from investors following extensive marketing but was eventually accused of producing subpar artwork. Following the reveal, Pixelmon issued an apology, and the collection was mocked in the community.
Before investing in cryptocurrencies, the EU Financial Regulators prompted consumers to first consider whether they could afford to lose all their invested money, warning that they’re “unlikely to have any rights to protection or compensation if things go wrong.”
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Follow CoinCu Youtube Channel | Follow CoinCu Facebook page
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