'Don't fall for a fantasy' – AG Bonta urges caution in crypto investing
OAKLAND – California Attorney General Rob Bonta urged investors seeking to invest in cryptocurrency to be cautious, amid recent volatility in the crypto market and the bankruptcy of a major exchange.
"From celebrities to your next-door neighbor, it seems like everyone these days is investing in cryptocurrency based on the promise of fast and easy money," Bonta said in a statement Tuesday. "Don't fall for a fantasy – Cryptocurrency, like all investments, carries significant risks, and there's no guarantee that you'll see large – or any – returns."
Bonta urged consumers to watch out for certain signs while investing, including guarantees of large returns, token names that are similar to well-known cryptocurrencies, companies that require payments in cryptocurrency and ventures that require large payments upfront.
"You should only invest money you are willing to lose, and you should be on the lookout for red flags and potential scams," the attorney general went on to say.
Bonta issued his warning after FTX, one of the largest cryptocurrency exchanges, suddenly filed for bankruptcy last week. The exchange and its former CEO are now facing investigation among federal authorities and in other nations for potential securities violations.
The California Department of Financial Protection and Innovation has also launched its own investigation into the FTX collapse.
"I think this is a space where investors and consumers should really be very careful," Treasury Secretary Janet Yellen told CBS News on Tuesday, suggesting the crypto market may need additional regulation.
Experts said investors who lost money in the FTX collapse may not get their money back for years, if at all.
Bonta urges potential crypto investors to visit the California Attorney General's website for additional information on how to avoid scams and other pitfalls while investing.
Investors who believe they may have been scammed are urged to file a complaint with the California Department of Justice at https://oag.ca.gov/report. Complaints can also be filed with the state's Department of Financial Protection and Innovation, Federal Trade Commission, Commodities and Futures Trading Commission, Securities and Exchange Commission and Internet Crime Complaint Center.