Financial Protection

Crypto troubles grow

At PIRG, we’ve been warning about the dangers of scams and frauds in the crypto space for over a year. So have leading regulators including the CFPB, FDIC and SEC. Crypto products are volatile investments unsuitable for consumers hoping to grow their assets. In addition to volatility due to the nature of the products — whether so-called currencies (they’re not), tokens or coins — the crypto space teems with scams and rip-offs from “rug pulls” to “pig-butchering.

It’s getting harder and harder to keep up with the latest meltdowns in the space. This week, New York State’s financial regulator fined Coinbase, one of the nation’s largest cryptocurrency trading platforms, $50 million and ordered it to spend “no less than” another $50 million to improve the platform’s compliance with anti-money laundering and other regulations. 

Of course, that story is just a sideshow compared to the ongoing saga of the dual collapse of the FTX trading platform and its closely-affiliated crypto trading firm Alameda Research late last year and the arrest of several executives, including founder Sam Bankman-Fried. The ripple effects are still spreading.

The CFPB and PIRG both urge consumers to beware of common scams (including fake customer support), to report suspicious claims that crypto-assets are “FDIC-insured,” and to file complaints with the CFPB. The CFPB particularly notes scams on older Americans and servicemembers: “complaints include reports of scams targeting servicemembers through identity theft or romance scams.”

I doubt we’ll see many, if any, crypto ads on the Super Bowl show this year. 

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