New York Attorney General Letitia James handed down a warning about the dangers of investing in cryptocurrency due to market volatility that could result in deep financial losses and other risks.
James urged caution after the cryptocurrency market reached record lows in May that left investors with hundreds of billions in losses. She pointed out that the gamut, from the newest coins to the most well-established, took a deep dive.
“Over and over again, investors are losing billions because of risky cryptocurrency investments,” James said in a press release. “Even well-known virtual currencies from reputable trading platforms can still crash and investors can lose billions in the blink of an eye. Too often, cryptocurrency investments create more pain than gain for investors.”
She added that people should use prudence “before putting their hard-earned money” in dicey cryptocurrency holdings that can “yield more anxiety than fortune.”
See also: Crypto Industry Lobby Punching Above Its Weight Class
The lack of federal regulations and oversight are more reasons investors should proceed with extra caution when putting money into crypto, she said.
Her guidance comes amid the collapse of the stablecoin Terra, which unpegged from the U.S. dollar weeks ago and sent ripples across the crypto world. Bitcoin also dropped by more than half since its record high last November.
Read more: What’s the Price of Failure in the Crypto Sector?
The guidance issued by James also pointed to the myriad conflicts of interest in the crypto sector. Numerous operators of crypto trading platforms are also invested in digital assets and then trade on the platforms they operate without oversight, James said in the release.
“Even ‘legitimate’ investments in virtual assets are subject to speculative bubbles and security issues. Investors in virtual assets should beware of the many significant risks of investing in these products,” James said.
You may also enjoy: As Crypto Values Drop, Lawsuits Go Up
Lawsuits over cryptocurrency losses began even before Bitcoin free-fell and Terra dived, fueled by investors alleging the coins were hyped and sold under false pretenses, PYMNTS reported earlier this week.
Some lawsuits allege pump-and-dump schemes involving celebrity promoters. Others have to do with the coins being unregistered securities and claim the issuers were deceitful.
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