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FameEX Hot Topics | US SEC Advises Investors of Potential Security Risks Associated with Crypto Assets

2023-03-24 11:09:05

The US Securities and Exchange Commission (SEC) has reiterated its warning to investors that investments in cryptocurrency assets remain highly risky. In a statement, the SEC noted that while the cryptocurrency market has seen tremendous growth, it has also been characterised by significant volatility and several instances of insolvency and asset value loss.The regulator stated that investors should only risk funds that they can afford to lose entirely. It noted that the platforms where investors buy, sell, borrow or lend cryptocurrency assets may lack critical investor protections, and that investments in these assets are "exceptionally volatile and speculative".


The cryptocurrency market had a challenging year in 2022, with several high-profile companies collapsing, and cybercrime activity increasing. The collapse of FTX was one of the most notable incidents, with the once high-flying exchange filing for bankruptcy. The company's founder, Sam Bankman-Fried, is also facing criminal charges in the US.The collapse of FTX followed on the heels of the failure of Celsius Network and Three Arrows Capital, which suffered significant losses. The industry was also hit by the collapse of the Luna cryptocurrency and its associated Terra stablecoin, which occurred in May, and resulted in significant job losses.These events have caused a decline in investor interest in the sector, and many market participants are calling for increased regulation to protect investors from the risks associated with cryptocurrency investments.


In conclusion, the SEC's warning serves as a reminder to investors that investing in cryptocurrency assets carries significant risks, and they should only invest funds they can afford to lose entirely. Additionally, investors should be aware that the platforms where they transact in these assets may lack important investor protections. Finally, the industry's recent difficulties suggest that regulators and market participants alike must remain vigilant to ensure that investors are adequately protected.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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