A US agency that probes allegations of deceptive conduct confirmed on Monday that it had investigations open into several cryptocurrency firms for “possible misconduct.” The Federal Trade Commission spokesperson declined to name the firms or say precisely what actions prompted the investigations.
“While we can’t comment on current events in the crypto markets or the details of any ongoing investigations, we are investigating several firms for possible misconduct concerning digital assets,” the spokesperson said in a statement.
Bloomberg said in a report that the investigation was linked to misleading advertising but the FTC spokesperson declined to confirm this.
The spectacular implosion of FTX recently sent fresh shock waves through the cryptocurrency industry, with the value of Bitcoin down sharply this year.
The Securities and Exchange Commission, which also has regulations mandating disclosures from individuals promoting securities, has cracked down on celebrity endorsements, including reality TV star Kim Kardashian on allegations of promoting a crypto token on her Instagram account without proper disclosure that she had been paid.
The FTC has also pursued companies that presented themselves as cryptocurrency-related firms but which were allegedly nothing more than scams.
Back in June, the FTC said in a report that more than 46,000 people reported losing over $1 billion (roughly Rs. 8,233 crore) in cryptocurrency scams since the start of 2021.
Nearly half the people who reported losing digital currencies in a scam said it started with an ad, post or a message on a social media platform, according to the FTC.
The craze for cryptocurrencies was at a fever pitch last year with Bitcoin hitting a record high of $69,000 (roughly Rs. 56 lakh) in November 2021.
Nearly four out of every ten dollars lost in a fraud originating on social media was lost in crypto, far more than any other payment method, with Instagram, Facebook, WhatsApp and Telegram being the top social media platforms in such cases, according to the FTC’s report.
© Thomson Reuters 2022