A Federal Trade Commission official claimed that cryptocurrency scams looted investors of $532 million in the first two months of 2018 and predicted that the total loss could inflate to $3 billion by the end of the year. Andrew Smith, director of the Bureau of Consumer Protection of the FTC, stated the figures during an event on crypto frauds on Monday.

Joe Rotunda, enforcement director of the Texas State Securities Board, said that the fraud problem exists partly because investors are irresponsible with their money. He mentioned that the massive rise in the price of cryptocurrencies and their sharp fall later makes the industry vulnerable to scams.

He also alerted the regulators and suggested that they need to adopt a proactive approach in this kind of market. Rotunda remarked that people had been lured into these investments since late last year.

The timing coincides with the unprecedented rise in the price of digital currencies. Rotunda stated the regulators first need to identify companies that want to operate in a legal framework and work with them to remove the con players.

He added:

“The companies that are trying to do it right [should] get a telephone call from the regulator, not a cease-and-desist order, right? Not a lawsuit. We can usually work with them … [and] we need to identify the fraudulent schemes, and we need to act quickly and stop them.”

Rotunda’s sentiments were echoed by Coin Center Research Director Peter Van Valkenburgh. He said that that significant price fluctuations make people expect exponential returns from these currencies and therefore become easy targets for pump-and-dump schemes and exit scams.

Valkenburgh said:

“I think nobody should ever buy any more cryptocurrency, put anymore [into] cryptocurrency than what they are completely willing to lose … if you are willing to participate at all. That is a message that needs to be repeated and repeated.”

The event witnessed some calls for self-regulation within the crypto industry and legitimate companies, along with investors have found this a credible idea. However, even after rigorous discussions, the panel concluded that the due diligence from investors is the first step to stopping cybercrime.

Valkenburgh went on to say that, if investors are unable to explain what a token does to someone, they should not buy it. He also suggested that if investors can’t differentiate “technological gibberish” from real innovation, they should not participate in the market.

While the warnings from these officials stand the test of time, it is important to note that even government agencies have had a difficult time figuring out these assets.

FTC Predicts Consumers Will Lose Over $3 Billion to Crypto Frauds by the End of 2018 was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.

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