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Securities and Exchange Commission Warns Investors Against Meme Coins

The Securities and Exchange Commission (SEC) has issued a warning to investors, particularly regarding meme coins. The financial regulator aims to warn against the spread of fraud in the digital currency sector.

Securities and Exchange Commission issues urgent warning to investors

The day before yesterday, the Securities and Exchange Commission (SEC) published An article Titled “5 Ways Fraudsters Can Lure Their Victims Into Crypto-Asset Scams – Investor Alerts.”

In this article, the regulator warns investors about the different methods most commonly used by fraudsters to extract money from their victims. These methods include the use of hype around new technologies, identity theft, fake supplements and the use of social networks.

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However, among the methods used, the regulatory body also identifies the fact that “fraudsters can increase the price of the crypto asset and sell it at your expense.” This is a method commonly referred to as “pump and dump.” For example, we find meme coins. As the article shared by Wall Street Cop explains:

"Fraudsters can use a pump and dump scheme with crypto assets, including so-called meme coins that reference popular culture or internet memes."

The pump and dump method actually involves inflating the price of an asset to attract investors and then dumping it to ensure that investors are not able to liquidate it in time. For the SEC, this is the case of pre-sales organized via social networks on different same corners. Where to warn:

"Typically, once the promoters sell and take their profits, the price drops quickly and everyone who purchased the tokens loses most of their money."

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To protect against this type of scheme, the SEC advises investors to exercise caution in general:

“Never make investment decisions based solely on information from social media platforms or applications. »

The warnings from the American financial regulator are perfectly logical. However, the problem is that it is almost impossible to find information anywhere other than on social media. This contributes to the speculative nature of this type of cryptocurrency.

Could you be a Wall Street cop warning investors that he plans to attack the meme ecosystem soon, because he considers it illegal? As of now, the authority hasn't really been forthcoming about the meme coins. However, from the tone of the article, it doesn't seem like they actually support this type of asset.

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