New York Attorney General Letitia James issued two alert letters, one to the members of the crypto industry and the other to the crypto investors, as part of her ongoing efforts to protect New York investors.
In an alert, she reminded the members of the crypto industry that people and entities dealing in virtual or “crypto” currencies that are commodities or securities in the state of New York, and who do not qualify for an exemption, must register with the Office of the Attorney General.
She added that failure to register as a commodity broker-dealer, salesperson, or investment advisor exposes them to both civil and criminal liability under the Martin Act, a New York anti-fraud law.
In the past two weeks, AG James said they filed a lawsuit to shut down Coinseed’s fraudulent operation and also ended both Bitfinex and Tether’s illegal activities in New York.
A recent report by the U.S. Department of Justice (DoJ) concluded that segments of the virtual currency industry are not only enabling old-fashioned versions of international crime, ranging from financing terrorism to money laundering, but are also directly defrauding investors.
The DoJ echoed findings from a 2018 report issued by the Office of the Attorney General, which found that virtual currency platforms are “highly susceptible to abuse” and that protections for customers are often “illusory.”
In another letter, the AG has warned investors about the ‘extreme risk’ when investing in cryptocurrency. More so, the recent price run-up of crypotocurrencies such as Bitcoin and the ongoing pandemic should put investors on high alert for scams using virtual currencies.
“Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains. We will not hesitate to take action against anyone who violates the law,” said Attorney General James.
James added that trading in the current market exposes investors to risks, such as wild price swings, conflicts of interest among trading platform operators, and increased chances of market manipulation. Many criminals also use cryptocurrencies in their schemes, including for money laundering, human trafficking, blackmail, illicit financing, and tax evasion.
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