The U.S. financial industry watchdog has warned individuals to exercise caution before entering cryptocurrency, citing the continued presence of malicious fraudsters.
“Member companies wishing to engage in crypto-asset-related activities must identify and address relevant regulatory and compliance issues and risks,” the report said.
FINRA declares cryptocurrencies exposed to ‘manipulation scheme’
The Financial Industry Regulatory Authority (FINRA) has released its 2024 Annual Report outlining comments from various sectors on the regulator’s reporting requirements. This includes financial crime, company operations, communications and sales, market integrity and financial management.
However, this year FINRA also includes cryptocurrency asset development.
The report highlights the continued involvement of malicious hackers and fraudsters in this sector. In addition, it was explained that the company would deceive investors by using assets with low market capitalization.
“Bad actors are taking advantage of investor interest in crypto assets and blockchain technology by engaging in manipulative schemes similar to those that exist in stock markets, including those typically involving undervalued securities.”
It also highlighted that exchanges can also benefit malicious actors due to the differences between centralized and decentralized exchanges.
The report emphasized that “additional forms of market abuse related to cryptoassets may arise due to differences in market structure.”
Read more: How to Make Money in Cryptocurrency: Top 4 Ways to Make Money in 2024
Amazing annual volume of cryptocurrency theft
Web3 anti-fraud platform Scam Sniffer has revealed the sheer volume of stolen cryptocurrencies in 2023. This was due to increasingly sophisticated phishing scams.
“Last year, Scam Sniffer monitored Wallet Drainers stealing approximately $295 million in assets from approximately 324,000 victims,” the report said.
However, while hacking attacks have far-reaching impacts, the community responds quickly, usually within 10 to 50 minutes.
Meanwhile, Scam Sniffer points out that airdrops, organic traffic, paid ads, and hijacked Discord links are not easily detected.
Read more: What is Rug Pull? Guide to Web3 Scams
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