The U.S. Securities and Exchange Commission Thursday issued an investor alert urging caution around crypto asset securities, warning that firms offering crypto investments may not be complying with U.S. laws.
The SEC said unregistered offerings in crypto asset securities may not provide investors important information for informed decision-making, including audited financial statements.
The SEC also said a popular term among crypto firms is “proof of reserves,” but that this “may not provide any meaningful assurance that these entities hold adequate assets to back their customers’ balances. A proof of reserves is not a rigorous or as comprehensive as a financial statement audit and may not provide any level of assurance.”
The SEC also said that no crypto asset entity is registered with the SEC as a national securities exchange.
Fraudsters continue to exploit the rising popularity of crypto, the SEC added. As well, it reminded investors to be wary of celebrity endorsements of the volatile asset.
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