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The North American Securities Administrators Association (NASAA) sees cryptocurrency-related investments among the top five investor threats in the coming year.
NASAA is an international investor protection organization representing state and provincial securities regulators in the United States, Canada, and Mexico.
In a press release dated Dec. 23, it announced the top five products or schemes that are likely to trap investors in 2020 based on investor complaints, ongoing investigations, and current enforcement trends. This includes promissory notes, Ponzi schemes, real estate investments, cryptocurrency-related investments, and social media/Internet-based investment schemes.
“It is important for investors to understand what they are investing in and who they are investing with. Don’t fall for promises of guaranteed high returns with little to no risk or deals pitched with a false sense of urgency or limited availability,” said Christopher W. Gerold, NASAA President and Chief of the New Jersey Bureau of Securities.
In particular, Gerold cautioned investors against private offerings, which are exempt from federal securities registration requirements and not sold through public stock exchanges.
“Unregistered private offerings generally are high-risk investments and don’t have the same investor protection requirements as investments sold through public markets,” he said.
NASAA urged investors to ensure that the salesperson and the investment are properly licensed or registered, which would afford them with certain legal protections. Gerold emphasized that anyone offering to sell a security without a license is breaking the law.
In May 2018, NASAA launched Operation Cryptosweep – a coordinated enforcement effort by state and provincial securities regulators in the United States and Canada. The initiative has resulted in more than 330 inquiries and investigations and at least 85 enforcement actions related to initial coin offerings (ICOs) or cryptocurrency investment products.
Previously, NASAA President and Alabama Securities Commission Director Joseph P. Borg had said that while not every cryptocurrency-related investment offer is a fraud, it is important for individuals and firms selling these products to understand they could be subject to state and provincial laws or regulations, especially securities laws.
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