NY Attorney General Letitia James gave the harshest warning to all participants in the industry, following weeks of volatility in the cryptocurrency markets and two high-profile lawsuits involving crypto companies.
“You are faced with high risk, low protection”
In a double warning released on March 1, James warned retail investors “face high risks and low protection” both in terms of regular crypto trading and by bad actors who exploit a period of widespread economic anxiety and high unemployment.
Regarding day-to-day trading and the allure of the 2021 crypto bull market, James’ warning does not seem to have had any effect. The announcement said, “Even if you buy a solid virtual currency from a more reputable trading platform, the price could drop in an instant.” He points out that cryptocurrency trading is not like traditional stocks, bonds and other assets:
“Trading in the current market exposes investors to risks such as wild price fluctuations, conflicts of interest among trading platform operators, and increased market manipulation. Moreover, even legitimate investments in virtual assets are subject to speculative bubbles. ”
In the absence of centrally regulated exchanges, James warned that those targeted by fraudsters could not “apply” for help from law enforcement in the state.
Tether case caught public attention
After the deal with Bitfinex and Tether last week, it was determined that they misrepresented the degree to which Tether (USDT) coins are backed by fiat collateral. The outcome of the landmark lawsuit required firms to stop serving customers in New York state and pay the government $ 18.5 million in compensation.
Moreover, in mid-February, James sued crypto investment platform Coinseed for allegedly defrauding thousands of investors for more than $ 1 million.
Given that cryptocurrencies are defined as a commodity under New York’s Martin Law, James’ statement reminds brokers-resellers, investment advisors, and trading platforms that by law they must register with the Attorney General’s Office. If they fail to do so, they will be subject to both civil and criminal liability and may be banned from their future behavior, as well as ordered to pay damages and damages.