The Attorney General of New York is issuing a warning to investors of digital assets, saying that even well-established cryptocurrencies are extremely risky following last month’s market meltdown that saw the industry shed hundreds of billions of dollars in market capitalization.
In a new press release, New York Attorney General Letitia James says that wild price swings, fraud, theft, security issues and speculative bubbles associated with digital assets all pose significant financial risks to investors.
“Over and over again, investors are losing billions because of risky cryptocurrency investments. 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. I urge New Yorkers to be cautious before putting their hard-earned money in risky cryptocurrency investments that can yield more anxiety than fortune.”
According to the Attorney General, other risk factors for crypto investors include limited oversight as she notes that digital asset exchanges are not regulated by the federal government unlike the Nasdaq or the New York Stock Exchange.
James also says that holding stablecoins is risky, emphasizing that these crypto assets are not 100% stable due to the nature of the assets that sometimes back them.
Another risk factor, according to James, is the tendency of crypto exchanges to claim to be having technical issues during times of increased volatility.
“There is no guarantee that you will be able to liquidate your investments when you want – such as when the crypto markets begin to crash. During times of crisis, trading platforms may halt trading or purport to experience technical difficulties, preventing you from accessing your assets.”
The Attorney General also mentions hidden trading fees and the possibility that crypto exchanges are prioritizing their own investments over their clients’ interest as additional risk factors for investors.
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