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Social Media, Crypto and FX Top NASAA’s 2021 Investor Threats

Traditional online scams are joined by crypto and FX frauds in the list of top investor threats for 2021 from the North American Securities Administrators Association (NASAA).

The group of US States and Canadian provincial regulators today released their annual list of financial products that threaten to trap investors, identifying the most frequent sources of current complaints or industry investigations.

While the 2021 catalogue includes many long-standing threats, it features emerging vehicles such as cryptocurrency, which the watchdog describes as one of the greatest risks to investors this year.

NASAA’s updated list of five top threats that investors are likely to see in 2021 includes social media-based frauds, precious metals, cryptocurrencies, promissory notes and forex markets.

Many of the traps identified by NASAA promise high returns but provide little if any disclosure of risks and offer high commissions to aggressive sales practices.

Anyone who says their investment offer has no risk is lying. No one can guarantee an investment return, said the regulator.

In particular, the relatively old phenomenon of social media/Internet-based investments were identified as the top threats facing investors this year in a NASAA survey. Ranked second are cryptocurrency-related and precious metals-based investments.

Other highlights in the annual list compiled by NASAA show that despite the heightened awareness, FX schemes rounded out the top three threats.

The regulator has put the phenomenon of the crypto craze at the top of their investment scams list, highlighting that cryptocurrencies and related financial products may be nothing more than “public facing fronts for Ponzi schemes and other frauds.” As such, it advises investors to screen themselves from crypto promotions that fail to offer clear disclosures of their risks and costs.

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“Bad actors always try to leverage vulnerabilities wherever they can be found. We expect to see an uptick in complaints from investors lured into programs offering the promise of high returns as a way to supplement income lost as a result of the pandemic,” said Lisa A. Hopkins, NASAA President and West Virginia’s Senior Deputy Securities Commissioner.

In a new twist on online investment fraud, NASAA was concerned that scammers have immediate access to potential victims through their online profiles, which may contain sensitive personal information. As such, con artists can easily lure people and promote fraudulent investment products using a highly targeted pitch.

The NASAA noted that while some of the investigations involve suspected securities fraud, the regulators are also finding many other violations, including failure to register a product before it was offered to investors.


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