NASAA CAUTIONS INVESTORS ABOUT INVESTMENT SCAMS IN THE METAVERSE

WASHINGTON, Aug. 31, 2022 /PRNewswire/ -- The North American Securities Administrators Association (NASAA) today issued an Informed Investor Advisory cautioning investors to protect themselves from investment scams and frauds offered in the unregulated metaverse, the online virtual "world" that provides users with immersive experiences through virtual or augmented reality technologies.

According to the advisory, the metaverse may offer numerous potential investment opportunities, including virtual real estate, nonfungible tokens (NFTs) and other businesses. But the advisory warns that the lack of regulation in the metaverse, combined with the ability to operate from anywhere in the world, make it easy for fraudsters to hide their financial schemes. In addition, security lapses on some developing platforms and the ability to build fake metaverse experiences can lead to hacks, fraud, or the theft of users' funds.

"Investors should keep in mind that every investment comes with risk, and no investment can be guaranteed against loss," said NASAA President and Maryland Securities Commissioner Melanie Senter Lubin. "Our experience with so-called investment opportunities found in the metaverse, is that we see the same old financial scams simply dressed in new clothes and offered to investors in the metaverse. Investors need to be wary of any investment that is promising unrealistic returns with minimal risk."

The advisory, which was developed by NASAA's Investor Education Alerts and Advisories Project Group, explains the  risk of metaverse-focused investment scams and frauds, and how investors can protect themselves if they are considering investing in this emerging realm.

"It is important to do research before participating in any investment opportunity to learn if it is a legitimate offering and whether it is registered with one or more securities regulators," said Diane Young-Spitzer, NASAA's Investor Education Alerts and Advisories Project Group Chair, Board member, and Massachusetts Securities Division Director and General Counsel.  

NASAA provides the following tips to help investors identify common telltale signs of possible investment fraud in the metaverse:

• Understand the risks and make sure you are comfortable with them, including the possibility that you might lose your entire investment.
  
  
• Verify that the investment and person/entity offering the investment scheme are registered with one or more securities regulators. To find the contact information for your securities regulator visit NASAA's online directory.
  
  
• Avoid discussing investments or sharing personal or account information with avatars, or digital representations of users that can take on any appearance or personal attribute. Fraudsters may try to leverage shared interests, ideas, and goals to build trust and convince investors to invest in phony investment schemes.
  
  
• Steer clear of metaverse crypto or NFT investment offers and avoid investment advice in the metaverse.
  
  
• Be wary of misinformation including fake news and online celebrity gossip as scammers write fake online articles and social media posts that create buzz by falsely stating a celebrity or public figure is involved in technology investment.

Investors should know that the rules that apply to investments in the physical world also apply to investments in virtual worlds. When considering any investment, you should watch for signs of fraud, and objectively consider all the information available to you before purchasing it. If you suspect fraud or illegal activity, contact your state or provincial securities regulator immediately.

The easiest way to protect yourself from investment fraud is to contact the securities regulator in your jurisdiction to verify that the person or entity offering it are registered.

Learn more about NASAA at https://www.nasaa.org/.

SOURCE North American Securities Administrators Association (NASAA)