New York’s attorney general issues a warning to digital asset investors, saying even well-established cryptocurrencies are extremely risky after last month’s market crash that saw the industry lose hundreds of billions of dollars in market capitalization.
in a new Press releaseNew York Attorney General Letitia James said wild price swings, fraud, theft, security issues and speculative bubbles associated with digital assets all pose significant financial risks to investors.
“Time and time again, investors lose billions to risky investments in cryptocurrencies. 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 careful about putting their hard-earned money into risky cryptocurrency investments that can generate more anxiety than fortune.
Other risk factors for crypto investors, according to the attorney general, include limited oversight, as she notes that digital asset exchanges are not federally regulated unlike the Nasdaq or the New York Stock Exchange.
James also says that owning stablecoins is risky, pointing out 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 pretend to have technical issues in times of heightened volatility.
“There is no guarantee that you will be able to liquidate your investments whenever you want – such as when crypto markets start to crash. In times of crisis, trading platforms may halt trading or claim experience technical difficulties, preventing you from accessing your assets.
The Attorney General also mentions hidden trading fees and the possibility of crypto exchanges prioritizing their own investments over the interests of their clients as additional risk factors for investors.
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