New York Attorney General Letitia James has issued a warning about the dangers of investing in cryptocurrency due to market volatility which could lead to significant financial losses and other risks.
James urged caution after the cryptocurrency market hit record highs in May, which left investors with hundreds of billions in losses. She pointed out that the range, from newer to more established pieces, had taken a deep dive.
“Time and time again, investors lose billions from risky cryptocurrency investments,” James said in a post. Press release. “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 .
She added that people should exercise caution “before putting their hard-earned money” into risky cryptocurrency holdings that can “produce more anxiety than fortune.”
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The lack of federal regulation and oversight is an additional reason investors need to proceed with extra caution when investing money in crypto, she said.
His advice comes amid the collapse of stablecoin Terra, which broke away from the US dollar weeks ago and sent ripples through the crypto world. Bitcoin has also fallen more than half since its all-time high last November.
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The advice issued by James also highlighted the myriad of conflicts of interest in the crypto industry. Many crypto trading platform operators also invest in digital assets and then trade on the platforms they operate unsupervised, James said in the statement.
“Even “legitimate” investments in virtual assets are subject to speculative bubbles and security issues. Investors in virtual assets should beware of the many significant risks associated with investing in these products,” James said.
You can also take advantage of: As Crypto Values Fall, Lawsuits Rise
Lawsuits for cryptocurrency losses began even before Bitcoin’s freefall and Terra’s plunge, fueled by investors alleging the coins were being hyped and sold under false pretenses, PYMNTS reported earlier this week.
Some lawsuits allege pump-and-dump schemes involving celebrity promoters. Others have to do with the coins being unregistered securities and claiming that the issuers have been misleading.