New York’s attorney general is warning both investors and the investment industry about the “extreme risk” of dealing in cryptoassets.
In a pair of alerts issued Monday, State Attorney General Letitia James advised investors to use “extreme caution” when trading cryptoassets due to volatility risks, conflicts of interest at trading platforms and the threat of market manipulation, among other concerns.
“Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains,” she said.
Alongside the speculative bubble risk she also said that the disruptive effects of the Covid-19 pandemic have law enforcement on guard against fraudsters seeking to exploit vulnerable investors.
James also warned mainstream brokers, dealers and investment advisors about the risk of “both civil and criminal liability” if they don’t meet their registration obligations when they do business in the crypto space.
The warnings came on the heels of recent enforcement actions by her office and a court ruling that found virtual currencies are to be considered commodities.
“Today, we’re sending a clear message to the entire industry that you either play by the rules or we will shut you down,” she warned.