The United States financial industry watchdog cautions individuals to exercise caution before entering cryptocurrency, citing the ongoing presence of malicious scammers.
“Member firms seeking to engage in crypto asset-related activity should identify and address the relevant regulatory and compliance challenges and risks,” the report stated.
FINRA Declares Crypto is Exposed to ‘Manipulative Schemes’
The Financial Industry Regulatory Authority (FINRA) has released its 2024 annual report outlining its comments on different sectors of the reporting requirements for the regulator. This includes financial crime, firm operations, communication and sales, market integrity and financial management.
However this year, FINRA also includes crypto asset developments.
The report highlights the ongoing involvement of malicious hackers and scammers in the space. Additionally, explaining that they will exploit low market-cap assets to deceive investors.
“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 the equities market, including those that are commonly associated with low-priced securities.”
However, the regulator pointed out that disparities between centralized and decentralized exchanges may provide an advantage to malicious actors as well.
“Additional forms of market abuse involving crypto assets may result from differences in their market structure,” the report highlighted.
Meanwhile, Scam Sniffer notes that airdrops, organic traffic, paid advertising, and hijacked Discord links are not as easily detected
