State
securities regulators across North America are grappling with an unprecedented
wave of technology-driven investment fraud, with investigations into digital
assets and social media scams reaching record levels in 2023, according to an
annual enforcement report released Tuesday.
Crypto, Social Media Scams
Drive Record US Securities Probes
The North
American Securities Administrators Association’s (NASAA) 2024 Enforcement
Report revealed that state regulators conducted 8,768 active investigations
last year, with digital assets and internet-based fraud emerging as the
dominant threats to retail investors.
Regulators
initiated 343 new investigations
into cryptocurrency-related schemes excluding staking and NFTs, while
another 144 cases specifically targeted crypto staking operations. Social
media-driven investment fraud accounted for 205 new cases, marking a
significant increase from 2022 levels.
“Fraudsters
often exploit the buzz that comes with innovation and technology to take
advantage of investors,” said
Leslie Van Buskirk, NASAA President and Administrator, Division of Securities,
Wisconsin Department of Financial Institutions. “Combine that with the many
ways in which technology and social media link us together and bad actors find
significant opportunities to try and rip off investors,”
The
enforcement actions resulted in more than $333 million in monetary penalties
and restitution orders. Courts handed down criminal sentences totaling 461
years of incarceration and 227 years of probation.
The report detailed extensive oversight of licensed
securities professionals:
Regulators also took decisive action against misconduct, revoking 52
licenses and barring 86 individuals and firms from the industry.
The UK FCA
also recently took more decisive action against unregulated crypto firms.
During a period of 10 months, the regulator issued over 1,000 warnings and
removed 48 potentially dangerous apps from popular online stores.
Rising
Trend in Senior Financial Exploitation
The targeting of older investors has reached alarming levels, with state
regulators receiving 3,481 complaints of alleged misconduct against senior
citizens in 2023. These investigations led to 131 enforcement actions involving
nearly 3,000 elderly victims.
The most concerning development is the shift from traditional investment
frauds to technology-based schemes, with internet scams and digital assets
emerging as the top two threats to senior investors.
The NASAA Model Act to Protect…
