How hard is it to spot a crypto scam? According to SEC Chair Gary Gensler, it’s not nearly as difficult as it might sound. Speaking to the U.S. Army during a Twitter Spaces earlier this month, Gensler and SEC Commissioner Caroline Crenshaw discussed what they consider the dangers of investing in crypto and how to tell if a project is a scam. “If something looks too good to be true, sometimes they really are,” Gensler said. “There are certain red flags that you can look for beyond it being too good to be true.” In general, Gensler laid out three telltale signs that something may be a scam: (1) the crypto project can’t provide clear documentation regarding how it works or how it plans to delivers on its goals; (2) the project can’t demonstrate that it’s in regulatory compliance; and (3) the project can’t easily explain what it is at all. Gensler also said that offers of high returns are a red flag and warned against projects that are overly complicated or that rush the investor to make a decision, praying on “FOMO,” or the fear of missing out. The SEC chairman also once again reiterated his belief that many cryptocurrencies may be unregistered securities.
Full story : SEC Chair Gary Gensler Says There Are Three Ways to Tell If a Crypto Project Is a Scam.
