SEC Official Calls Crypto Scams the ‘Flavor of the Year’

Scams involving celebrity endorsements of digital assets are becoming more common.

Aug 25, 2021 at 6:51 p.m. UTC
Updated Sep 14, 2021 at 1:45 p.m. UTC

A U.S. Securities and Exchange Commission (SEC) official called crypto scams the “flavor of the year” at a virtual event on consumer fraud Wednesday, according to a report from MarketWatch.

  • Peter Diskin, an assistant regional director at the SEC’s Atlanta office, said that fraudsters leverage popular sectors such as crypto to get the attention of victims.
  • Diskin pointed out that international criminals have a leg up with crypto scams, because the online and global nature of digital assets can make scams harder to spot and stop.
  • “Not infrequently the money can be removed from U.S. bank accounts and go overseas, which makes it even more difficult to recoup things if something goes wrong,” Diskin said.
  • Diskin also discussed the prevalence of celebrity endorsements in the crypto world, many of which have been tied to scams, such as actor Steven Segal’s promotion of a fraudulent initial coin offering.
  • Reports of crypto scams have soared recently, with nearly 7,000 people reporting total losses of more than $80 million to the Federal Trade Commission between last October and May, according to a report cited by MarketWatch. The reported median loss was $1,900. 

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.