New York State Attorney General Letitia James on Monday cautioned about the “extreme risk” of investing in cryptocurrencies and warned finance professionals of potential liability.
“All investors should proceed with extreme caution when investing in virtual currencies,” she said in a statement.
James also reminded Wall Street professionals of civil and criminal penalties they could face if they fail to register with the Office of the Attorney General’s Investor Protection Bureau.
“Too often, greedy industry players take unnecessary risks with investors’ money,” she said, describing cryptocurrencies as “high risk, unstable investments.”
Investments by some high-profile individuals and some companies have raised the profile of bitcoin and other cryptocurrencies in recent years.
In February, electric automaker Tesla announced plans to buy $1.5 billion worth of bitcoin and accept the digital currency as payment. Also in February, MasterCard rolled out plans to accept “select cryptocurrencies” on its network.
James pointed to recent lawsuits her office filed against Coinseed Inc., which was operating as an unregistered broker-dealer, and an $18.5 million penalty on two companies, Bitfinex and Tether, which agreed to end trading activity in New York State.
James said Tether and the parent company of Bitfinex falsely claimed that their stablecoins were fully backed by a reserve of U.S. dollars and moved millions of dollars between the companies to mask losses.