Texas Regulator Warns of New Crypto Frauds Amid Coronavirus Outbreak
The Texas State Securities Board urges investors to exercise caution when dealing with cryptos in the midst of COVID-19 pandemic.
The Texas State Securities Board (TSSB) has issued a warning on March 23 about crypto scams that have emerged in the wake of the COVID-19 pandemic.
The report refers to different types of scam, among which are those related to crypto investments that promise high returns in the midst of the coronavirus crisis.
Coronavirus-related scam methods
Among other scams, one of the most common is called “pump and dump.” The sceme consists of fraudsters who, based on penny stock purchases, try to boost prices by sharing “positive” information that turns out to be fake.
The method is to create fake news about companies that have allegedly found a cure for COVID-19. The TSSB highlights that fraudsters try to “capitalize on fear”, so the current coronavirus pandemic means they’re in their element.
Regarding existing scam methods, the Texas state regulator warns the following:
“Fraudulent investment offerings ranging from precious metals to real estate to complex stock market strategies are offered as a supposed hedge against stock market crashes or some other economic calamity.”
Other US regulators such as the Commodities Futures Trading Commission had issued alerts about fraudsters wanting to take advantage of the coronavirus contingency to profit from it.
Cryptos considered as high-risk assets by the Texas watchdog
Cryptocurrencies were included in the report as one of the main threats to investors. The Texas state watchdog warned that crypto is a high-risk investment and requires careful scrutiny.
Also, the Texas Investor Guide 2020 states that investors must determine some basic facts about the company they are dealing with, in addition to identifying their actual physical location before making business with them.
Latest crypto scams
Cointelegraph reported on March 20 that the U.S. Securities and Exchange Commission froze the assets of Meta 1 Coin, an alleged crypto scam backed by a former state senator which promised investors high returns of up to 224,923%.
Two Canadian nationals were also jailed in a U.S. federal prison on March 18 for stealing near 23.2 Bitcoins in a scam via Twitter during 2017.