With the continuous rise of cryptocurrencies’ value, investors, particularly in the United States, are all quite skeptical to be part of this trend, fearing that it might fizzle out soon. And yes, this is a clear example of FOMO or the “fear of missing out” mindset.
It can be understood why, all of a sudden, hoards of investors are frantically jumping into cryptocurrencies because these digital assets’ value is increasing ーmeaning, there is a big amount of money to make out of them.
And they are well aware that this trend wouldn’t last for long, a fact that compels them to jump in right away as long as the current trend is “hot.”
But the U.S. Securities and Exchange Commission has recently sent a warning to crypto investors that their FOMO mindset might put their funds in total peril.
Crypto scams
The Commission said that because of cryptocurrencies’ importance, fraudulent investment schemes are taking advantage of this trend to dupe unsuspecting investors.
The U.S. SEC’s Office of Investor Education and Advocacy (OIEA) and Division of Enforcement’s Retail Strategy Task Force (RSTF) have already issued an “Investor Alert” on crypto investment.
“Fraudsters continue to exploit the rising popularity of digital assets to lure investors into scams, often leading to devastating losses. Some investors may have FOMO, given the rise in the price of some digital assets in recent years, that they will miss the opportunity to become very wealthy,” the SEC’s notice said.
Red flags
The SEC has also laid out the red flags on investment scams such as guaranteed high investment returns with little or no risk.
The SEC also said that fraudsters are getting smarter by making their schemes look as legitimate as possible. One of their clever ways is posting fake, but believable, historical returns on their websites to “prove” high investment returns.
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