|
| FOR IMMEDIATE RELEASE:
April 8, 2024 |
|
AG Nessel Continues Recognition of Financial Literacy Month with Re-Issue of Cryptocurrency Alert
|
|
LANSING – In her quest to ensure that Michigan consumers are as informed as possible, Attorney General Dana Nessel has re-issued her alert, Cryptocurrency! What is it? What are the Risks? to highlight this speculative asset during Financial Literacy Month.
Before investing in cryptocurrencies, it is important to understand what they are and how they relate to fiat currencies. Fiat currencies, such as the dollar, are what we typically think of as money. Fiat currencies are managed by a nation’s central government. Cryptocurrencies are a form of digital currency, managed by either a private enterprise or algorithm, and function as digital cash that allows direct transactions between users. Cryptocurrencies are often touted as investment vehicles. Unlike traditional investments, such as stock and bonds, cryptocurrencies often lack underlying value, and investors have no legal recourse if their investment fails or if they fall victim to fraud. There is no way to reverse a cryptocurrency transaction.
While many see cryptocurrencies as an investment opportunity, potential investors should be aware of the perils involved in investing in cryptocurrency. According to the Federal Trade Commission (FTC), more than 46,000 people have reported losing money in cryptocurrency scams totaling over $1 billion in losses. This number is 60 times what it was in 2018.
Those statistics, along with the fact that cryptocurrencies are highly volatile assets, make them risky and likely to attract scammers. These scammers will often exploit the anonymity of cryptocurrency transactions to defraud investors.
According to the FTC, of the reported losses from cryptocurrency fraud since 2021, $575 million involved fraudulent investment proposals. In order to induce consumers to part with their crypto, investment fraudsters promise large profits and adapt old tricks to the new world of cryptocurrency. For instance, websites and applications that purport to track the progress of investors’ cryptocurrency are sometimes completely fake. Some investors are able to make small “test” withdrawals from the sites, but are not allowed to cash out unless they submit further cryptocurrency as “fees.” Or the scammer may tell the investor they have to pay an upfront fee or tax to withdraw their money.
“During Financial Literacy Month, it’s crucial to understand the risks associated with cryptocurrency,” Nessel said. “While it is often portrayed as a lucrative investment, the reality is far from glamorous. Cryptocurrencies are volatile, susceptible to scams, and lack the regulatory protections of traditional investments. Investing in cryptocurrency should be approached with caution and a thorough understanding of the risks involved.”
AG Nessel’s cryptocurrency alert advises potential investors to:
- Do your research.
- Be wary of high-pressure sales tactics or promises of quick returns.
- Don’t invest out of fear of missing out or because a celebrity has endorsed the product.
- Never invest more than you can afford to lose.
- Remember: If it seems too good to be true, it probably is.
- Demands payment in cryptocurrency – no legitimate business will insist on this kind of payment, but most scammers do because of its lack of protections;
- Guarantees profits or big returns – this should always be a red flag because investments have some element of risk; or
- Tries to mix online dating and investment advice – anyone on a dating app who tries to entice you into investing in cryptocurrency or asks you to send them cryptocurrency is a scammer.
This month is meant to shine a light on the critical role personal finance plays in providing us with the financial freedom to take control of our lives and keep up with the world’s changing financial landscape. Protect yourself by being vigilant and informed in your investment decisions.
Making the path to financial literacy a lifelong pursuit is a step in the right direction.
You can report cryptocurrency fraud on the FTC’s website. To file a complaint with the Attorney General, or get additional information, contact:
|
|
|
|
