The European Union's regulators of financial markets, banks, and insurance have taken steps to protect consumers from the risks associated with cryptocurrency investments. Investors in cryptomonnaies, according to EU regulators, risk ruining their investments. They then issued a warning about the dangers of investing in cryptocurrency.
A warning on the dangers of crypto-currency trading.
L'Autorité bancaire européenne, l'Autorité européenne des marchés financiers, and l'Autorité européenne des assurances et pensions professionnelles, three European financial regulators, released a joint press release on Thursday warning consumers about the risks associated with cryptocurrency trading.
« Consumers face a very real risk of losing all of their invested funds if they acquire these assets, according to the EU's three financial monitoring agencies », they said. The warning was prompted by the growing interest among investors in digital assets, as well as aggressive advertising of cryptomonnaies and related products through social media and influencers. Cryptomonnaies are risky, suspicious, and "ne conviennent not to the majority of consumers of detail as an investment, a means of payment, or an exchange," according to regulators.
The warning includes a list of the most significant risks that regulators believe investors should consider before investing in crypto-currencies. The main concerns of regulators include extreme volatility, false information, a lack of consumer protection, fraud, piracy, and market manipulation.
Protecting consumers against the resurgence of crypto-criminals
Regulators issue a warning as the prevalence of fraud, theft, and misleading advertising on the cryptocurrency market reaches new heights. According to the most recent report on crypto-criminality from Chainalysis, crooks will have amassed a record amount of 14 billion dollars in crypto-currencies by 2021. There are several examples of orchestrated heists with the participation of artists, celebrities, and influencers.
For example, in January, a group of investors filed a class-action lawsuit against Kim Kardashian, a reality TV personality, and Floyd Mayweather, a boxing champion, for making "false or misleading statements" and promoting the EthereumMax project, which has since lost 97.8% of its value.
Since the technology has gained in popularity, the NFT area has become a particularly fruitful ground for escroqueries. Many projects have been chastised for charging expensive fees for NFTs, defrauding investors, and failing to keep their promises. One of the most recent major scandals was the Pixelmon project, which raised 70 million dollars from investors after an aggressive marketing campaign, but was later accused of selling stale artwork. Pixelmon has issued an apology following the reveal, and the collection has sparked debate in the community.
Consumers should ask themselves, before investing in cryptocurrency, if they can afford to lose all of the money they are about to invest. Because "it is unlikely that they would have rights to protection or indemnification if things went wrong."
Source. Cryptobriefing.com
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