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The SEC Advises Against Buying Crypto Asset Securities Because They Could Not Be Legal.

March 23, 2023
minute read

The Investor Education and Advocacy office of the United States Securities and Exchange Commission issued a statement on Thursday morning warning investors to exercise caution when investing in securities backed by crypto assets.

According to the statement, investments in cyber property securities can be "exceptionally volatile and speculative," and the platforms wherein investors trade crypto may not offer enough investor protections. The risk is still considered to be high, the statement continues.

The announcement comes a day after Coinbase COIN, -14.05% received an SEC warning of possible securities charges on Wednesday, which caused the Coinbase stock to decline 16% that evening.

Recently, regulators have tightened down on the cryptocurrency business, including by penalizing Kraken $30 million and ending its staking program in February.

Recently, fines have also been imposed on celebrities and influencers who advertise cryptocurrency on social media, such as former NBA player Paul Pierce and Kim Kardashian. A renowned person's endorsement of a good investment is never a solid reason to make a purchase decision, according to a statement released by the SEC on Thursday.

The SEC also filed allegations related to unregistered securities against Genesis Trading and Gemini in January, two cryptocurrency exchanges for exchanging Bitcoin BTCUSD, +3.99%, Ethereum ETHE, +6.49%, and other cryptocurrencies.

According to the statement, "during the past year, a handful of crypto asset businesses have encountered severe financial difficulties, occasionally as a result of restricting consumers' ability to withdraw their holdings." "Several crypto asset businesses have filed for bankruptcy, although it is unknown how much (if any) of their holdings customers may be able to get back. Investors should be skeptical of statements like "you can remove your assets at any time." and "you always keep ownership of their crypto assets."

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Adan Harris
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Eric Ng
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John Liu
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Bryan Curtis
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Adan Harris
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Cathy Hills
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