As the wider digital asset roils under the news of the collapse of high-ranking projects, California’s Attorney General Rob Bonta has released guiding principles for newbie investors.
The state’s Department of Justice (DoJ) launched a webpage dedicated to all classes of digital assets designed to guide residents considering putting funds in them. The page throws light on the scams marauding the industry, such as romance scams involving digital assets, rug pulls, and pig butchering.
“Even when there are no scams involved, crypto assets can be risky, especially if you don’t have enough information to make sound judgments about how you’re spending your money,” said Rob Bonta.
The Attorney General warned that some shady digital asset projects might recruit celebrities to promote them to lure investments from unsuspecting members of the public. According to Bonta, the way around this is for potential investors to conduct diligent research before investing in any digital asset project.
“Don’t fall for a fantasy – cryptocurrency, like all investments, carries significant risks, and there’s no guarantee that you’ll see large – or any – returns,” he warned.
Bonta added that there is no government guarantee for monies invested in digital assets, and investors should look before they leap to avoid being scammed. Other red flags highlighted on the webpage include the following:
- Unsolicited phone calls or emails.
- Investments requiring large upfront payments.
- The use of token names similar to popular virtual currency projects.
The warning urged investors to stay abreast of the recent happenings in the industry by following the advisories regularly issued by the Commodities and Futures Trading Commission (CFTC), Securities and Exchange Commission, and the Federal Trade Commission (FTC).
California’s positive stance toward digital assets
California has consistently ranked highly in polls on the reception of digital assets in the past. A 2022 study by SmartAsset placed California as the best state for “crypto-readiness” given its government stance and the influx of digital asset firms to it.
In September, Governor Gavin Newsom scuttled attempts for a bill to create an overarching framework for regulating digital assets in the state. Newsom refused to append his signature to the bill on the grounds of being “premature to lock a licensing structure in statute” without considering the efforts of the federal government in regulating the sector.
This is the second time the state will attempt to pass strict legislation on the digital assets industry—the first dating back to 2015 but failed due to staunch opposition from a state senator.
Watch: SEC Commissioner Hester Peirce on Bitcoin Association’s Blockchain Policy Matters
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