Investor funds losses continue to mount with the meltdown of numerous cryptocurrency and misuse of investor funds by centralized cryptocurrency exchanges. Investor crypto fraud losses approached an estimated $680 million last year, and have grown exponentially this year. Many investors are falling victim to classic frauds updated for the Web3 age, such as crypto investment schemes promoted by fake influencers or scammers posing as investment advisers. Other new types of hacks, thefts, and fraud exploit the continued rise of decentralized finance, where criminals try to exploit blockchains or smart contracts. Formerly licensed and unlicensed investment managers soliciting investment in crypto projects and others continue to prey on unwary investors. There are recourse and recovery steps fraud and hacking victims can take to address their losses. Crypto was designed as a safe, medium-to-medium direct form of exchange. The appeal of crypto is obvious and apparent. Besides the prior runups in asset prices, crypto transfers can be accomplished in minutes with minimal fees. No third-party intermediaries are needed to transfer crypto assets, and they can be made by direct wallet-to-wallet transactions. However, cryptocurrency remains in its infancy, and the FTX disaster and other recent centralized exchange meltdowns have exposed the immaturity of the industry.
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