California Attorney General’s office launched a new website on Tuesday in a bid to inform consumers about the risks associated with cryptocurrency and more importantly, educate as many people as possible on how to spot and steer clear of cryptocurrency scams that beguile citizens to purchase cryptocurrencies.
Open Season on Crypto Scams in California
The website focuses on several assets, including traditional cryptocurrencies, byproducts of digital assets, and buying non-fungible tokens. All of these assets have been systematically used to “rug pull” or “burn” consumers. California AG Rob Bonta gave a statement and said that there was growing peer pressure on people to invest in cryptocurrencies these days:
From celebrities to your next-door neighbor, it seems like everyone these days is investing in cryptocurrency based on the promise of fast and easy money.California AG Rob Bonta
Bonta urged consumers to remain vigilant and to avoid “falling for a fantasy,” as cryptocurrencies more so than any other investment class were a high-risk venture. He cautioned that there may be no returns at all on people’s investments no matter what companies and scammers promise.
Bonta further encouraged people to do meticulous research on the cryptocurrencies they were looking to invest in or the businesses they wanted to be a part of, as those could be very risky.
His remarks come at a time when one of the biggest and most trusted companies in the sector, cryptocurrency exchange FTX, has filed for bankruptcy after it transpired that the company used consumer funds to feed a sister crypto trading company owned by the CEO, Sam Bankman-Fried.
“You should only invest money you are willing to lose, and you should be on the lookout for red flags and potential scams,” Bonta added. Even traditional Bitcoin investments carry a significant risk as indicated in a recently published study by the Bank of International Settlements, which established that around 81% of all retail investors who put money on Bitcoin in the period 2015-2022 generated a loss.
There are various ways to spot cryptocurrency scams, Bonta assures, and consumers should always be on the lookout for the telltale signs as well. Some of the recommendations listed by the AG’s office and on the new website include red flags such as promises for big returns that are not substantiated, tokens that seem to be knocking off other cryptocurrencies, and assets that require payment in crypto. Celebrity endorsements and unsolicited calls are also among the red flags outlined by the AG’s office.