SEC warns investors about risks associated with Crypto Assets

SEC warns investors about risks associated with crypto assets

The U.S. Securities and Exchange Commission (SEC) has issued an advisory notice to investors, cautioning them about the risks associated with crypto asset securities, following recent enforcement action against various crypto entities and celebrities.

The regulator stated that specific entities offering crypto asset investments or services may not be complying with applicable law, including federal securities laws.

The SEC also pointed out that crypto assets can be exceptionally volatile and speculative, and the platforms where investors buy, sell, borrow or lend these securities may lack important protections for investors.

In addition, the regulator mentioned that “so-called crypto exchanges” commingle operations that many SEC registered organizations handle, which creates conflicts of interest and risks for investors.

The SEC emphasized that proof-of-reserves (POR) methods, used by crypto businesses like exchanges, may not show liabilities or the use of customer crypto assets in crypto asset lending.

The SEC’s advisory notice follows the regulator’s recent lawsuit against Terraform Labs CEO Do Kwon, Tron’s Justin Sun, and the agency’s sending of a Wells Notice to Coinbase.

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