OAKLAND – California Attorney General Rob Bonta today urged Californians to stay informed and protect their money when investing in the cryptocurrency market. In recent years, cryptocurrency has risen in popularity as a form of digital investment, and it is important to remember that the cryptocurrency market is highly volatile and there is no government guarantee or insurance for crypto assets. In order to help Californians better understand cryptocurrency and the risks associated with their investments, today, Attorney General Bonta launched a new webpage with information on cryptocurrencies and how to avoid scams and other pitfalls. More information can be found at oag.ca.gov/crypto.
“From celebrities to your next-door neighbor, it seems like everyone these days is investing in cryptocurrency based on the promise of fast and easy money,” said Attorney General Bonta. “Don’t fall for a fantasy – Cryptocurrency, like all investments, carries significant risks, and there’s no guarantee that you’ll see large – or any – returns. You should only invest money you are willing to lose, and you should be on the lookout for red flags and potential scams. Our new webpage is meant to be a resource for Californians curious about this new and volatile market – so avoid the hype, get the facts, and visit oag.ca.gov/crypto.”
Crypto assets include cryptocurrencies, tokens, coins, non-fungible tokens (aka NFTs), stablecoins — essentially, any form of asset that is exclusively digital. The values of crypto assets are extremely volatile, and purchasing or investing in them involves a very high degree of risk. When investing in crypto assets, you should not use any money that you cannot afford to lose. Unlike money that you have in the bank, there is no government guarantee or insurance for digital assets.
PROTECT YOURSELF: DO SOME RESEARCH
Often times, your fear of missing out will make you more inclined to move fast and make a risky investment choice. Resist the urge: Always take a few days to consider whether you should actually move forward with an investment or purchase.
State and federal regulators often issue alerts about common scams and other red flags that they are seeing in the cryptocurrency field. Stay up to date with the California Department of Justice’s Cryptocurrencies webpage; the California Department of Financial Protection and Innovation’s Crypto Assets webpage; the Securities and Exchange Commission’s Crypto Assets and Cyber Enforcement Actions webpage; the Commodities and Futures Trading Commission’s Digital Assets webpage; and the Federal Trade Commission’s Cryptocurrency Consumer Advice webpage.
STAY ALERT: WATCH FOR RED FLAGS
Do some research before you invest and watch out for signs that an investment opportunity is too good to be true:
- Guarantees of large returns in exchange for money or cryptocurrency: If it sounds too good to be true, it probably is. Remember, there are no guarantees of large returns with crypto assets.
- Token names that are similar to well-known cryptocurrencies: Scammers will use names for their tokens that are incredibly similar to cryptocurrencies like bitcoin and ether in hopes that you will either assume their tokens are the real thing or that they are associated with the real cryptocurrencies. Look at the name carefully, and do a little research (especially on government agency websites like the ones listed in our “Tips to Stay Safe”) to see if the crypto asset is legitimate.
- Requiring payments in cryptocurrency: No legitimate companies will force you to pay in cryptocurrencies or other crypto assets.
- Requiring large upfront payments: Requirements that you pay a significant amount of money to participate in a particular money-making venture is a signal that you are being invited to a scam.
- Unsolicited phone calls or emails: Never give your account information to someone who calls or emails you unsolicited, even if they claim they are from a legitimate company. Instead, hang up the phone or close the email, go to the company’s website, and use the phone number or email on the website to contact the company.
- Celebrity endorsements: Not all celebrity endorsements mean that the underlying crypto asset is a scam, but it’s important to remember that celebrities get paid a lot of money to promote these assets.
FILE A COMPLAINT
If you believe you have been scammed or think someone is trying to scam you, file a complaint with state and federal regulators.
File a complaint with the California Department of Justice at oag.ca.gov/report. You can also file complaints with the following government agencies: