New York attorney general Letitia James has issued a statement to all residents of New York warning them that cryptocurrencies are risky, and that they should think twice before investing in them.
Letitia James Warns Against Crypto Usage
In the statement, she also takes aim at all cryptocurrency businesses, claiming that if they do not follow the rules set forth by New York and the rest of the country, they are likely to face serious monetary and legal consequences. This is no doubt a nod to the recent court battle James faced with the likes of Tether and Bitfinex; a case that was ultimately settled and has barred both companies from ever doing business in New York again.
James mentions:
Too often, greedy industry players take unnecessary risks with investors’ money, but today, we’re leveling the playing field and issuing alerts to both investors and industry members across the nation. All investors should proceed with extreme caution when investing in virtual currencies. Cryptocurrencies are high-risk, unstable investments that can result in devastating losses just as quickly as they can provide gains… We will not hesitate to take action against anyone who violates the law.
Cryptocurrencies, despite having legions of loyal fans and users across the board, continue to face scrutiny in recent months and years given how vulnerable to price fluctuations they can be. These swings have often caused several traders to lose most or all their crypto savings within specific periods, as we saw in the year 2018 when bitcoin fell apart.
In addition, the space is often fraught with fraud and other illicit activity that causes losses and poses serious threats to users.
James recently “won” her legal standing against both Tether and Bitfinex within the Big Apple. While the case reached a settlement and was never placed in a judge’s hands, both entities will be forced to pay as much as $18.5 million in legal fees and can no longer administer their services to residents of the state.
Both firms have been accused in the past of hiding losses that amount to a whopping $850 million. Furthermore, James has accused Tether of lying to investors about how much money it had in its reserve accounts and about the status of its stable currency, which is allegedly backed by USD. James has stated that at the time the suit began, Tether had no USD in its bank reserves and thus the stable currency it had established wasn’t so stable.
Tether Feels the Same Way
Neither Tether nor Bitfinex has admitted to any wrongdoing, though the former has issued a formal statement explaining:
We share the attorney general’s goal of increasing transparency. Contrary to online speculation, after two and a half years, there was no finding that Tether ever issued tethers without backing or to manipulate crypto prices.