New York Attorney General Letitia James is warning would-be investors that cryptocurrencies are volatile assets that can "yield more anxiety than fortune.”
The attorney general, who ran a brief campaign for governor late last year, has been an aggressive enforcer of crypto regulations and a powerful skeptic of the industry. Last year, she warned New Yorkers about scams using virtual currencies.
This alert, published Thursday, goes a step further, asserting that even the most legitimate players in the industry are exposing their customers to extreme risk.
"Even well-known virtual currencies from reputable trading platforms can still crash and investors can lose billions in the blink of an eye," James said. "Too often, cryptocurrency investments create more pain than gain for investors."
James' warning follows a period of particular volatility in the crypto market, coming weeks after the collapse of the TerraUSD stablecoin and its related luna token left investors with billions in losses. Bitcoin and ether — listed among the well-known, reputable currencies James cited — have both lost half their value since reaching high points in November, prompting even staunch boosters to declare the arrival of a new crypto winter.
The notice detailed a long list of issues James sees with crypto investing: the prices "swing wildly" and crash without warning; there is no guarantee you can cash out during bad times; trading costs are high and there are no federally regulated exchanges, with trading platforms operating all over the globe.
James has also used New York's century-old Martin Act, among the most potent securities laws in the country, to take legal action against crypto firms. Most notably, the state AG's office last year reached a settlement with Tether and Bitfinex over what James said were misrepresentations of the assets backing the tether stablecoin. The organizations were barred from doing business in New York, and Tether also agreed to produce regular reports on the assets backing the tether stablecoin.
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