New York State Attorney General Letitia James issued an alert to investors in the state, reminding them of the risks of investing in cryptocurrencies following the sharp decline in the crypto market last month.
“Over and over again, investors are losing billions because of risky cryptocurrency investments,” James said. “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. I urge New Yorkers to be cautious before putting their hard-earned money in risky cryptocurrency investments that can yield more anxiety than fortune.”
James warned that cryptocurrencies are subject to volatile price swings that make them among the most high-risk investments on the market. In May, cryptocurrencies – nearly across the board — plunged deeply and wiped away hundreds of billions in investments. James outlined some of the key risks that investors should look out for. Among them, James said they are highly speculative and have unpredictable value; there is often difficulty in cashing out investments; there are higher transaction costs; stablecoins can be unstable; there are often hidden trading costs; there may be conflicts of interest among operators of virtual currency trading platforms; and there is limited oversight.
Earlier this year, James issued a notice to virtual currency investors and their tax advisors to accurately declare and pay taxes on their virtual investments. In October 2021, she directed unregistered crypto lending platforms to cease operations for not fulfilling their legal obligations. In March 2021, James warned New Yorkers of the risks of cryptocurrency investments and reminded investment platforms of their legal obligations.