A North American Securities Administrators Association (NASAA) survey shows that securities regulators believe that crypto scams are the top threat to the market in 2022. Crypto scams can be particularly devastating as the market experiences greater adoption.
Members of the North American Securities Administrators Association (NASAA), a body composed of securities regulators in the United States, believe that cryptocurrency scams are among the biggest threats to investors currently. The organization detailed the results of a survey on Jan 10, and it was clear that these members saw crypto scams as a major concern in 2022.
Crypto scams came top of the list with respect to investor threats, followed by scams and fraud of other methods. Alongside these results, NASAA also published some guidance for investors to protect themselves from scams and fraud.
Enforcement Section Committee Co-Chair Joseph P. Borg, Alabama Securities Commission Director, said of crypto scams,
By far, NASAA’s securities regulators revealed that investments related to cryptocurrencies and digital assets are our top investor threat. Stories of ‘crypto millionaires’ attracted some investors to try their hand at investing in cryptocurrencies or crypto-related investments this year, and with them, many stories of those who bet big and lost big began appearing, and they will continue to appear in 2022.
As noted by the announcement, crypto scams usually involve perpetrators offering high returns in exchange for funding, and education and awareness were the way to stop it. The lack of clear regulation also makes it more difficult to tackle scams in the space, it notes.
The threat of scams has long been a talking point in the crypto space and regulators. Many of these scams have taken place in the DeFi space, and Chainalysis reports that almost $14 billion was stolen in 2021.
All eyes on scams and investor protection in 2022
Two of the biggest scams in 2022 were the Squid Game Coin and the Africrypt exchange debacle. The latter was particularly devastating, with over $3.6 billion stolen. The NFT space is no exception to this trend, with a Bored Ape NFT collector saying that he was scammed via Discord.
The DeFi market is a prime target for malicious groups as it sees a heavy influx of capital. Some projects have taken steps to ensure it does not happen, including mandating audits and working with insurance protocols.
Regulators, too, are stepping up their game, putting investor protection as their highest priority. High-level officials have spoken. Most recently, U.K. lawmakers called for more crypto regulation to protect investors, while the SEC has long been noted to prioritize it.