New York attorney general warns cryptocurrency industry: ‘Play by the rules or we will shut you down’

A visual representation of digital currencies.

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New York attorney general Letitia James sent a blistering warning to investors and industry members about the dangers of cryptocurrencies on Monday.

“We’re sending a clear message to the entire industry that you either play by the rules or we will shut you down,” she said in a press release.

The warning from James, which addressed individual investors and crypto industry members, comes amid a major start to 2021 for digital assets like bitcoin.

The cryptocurrency surged to a new all-time high above $58,000 earlier this month, after garnering attention from Wall Street banks, companies like Tesla and even the U.S. government.

Bitcoin, which was created in 2009, has evolved from a protest against the banking system to something of a “digital gold” that is beginning to catch on with mainstream investors.

Investment banks like JPMorgan and Goldman Sachs have shown interest in the asset class. Plus, companies like Mastercard have made significant moves to support cryptocurrencies. Tesla invested $1.5 billion into bitcoin in February.

The price of bitcoin rose more than 10% over the last 24 hours to hit $48,528, as of approximately 1:51 p.m. ET, according to CoinDesk. Other popular digital currencies include Ethereum and Litecoin.

James told members of the crypto industry in New York they must be registered with the Office of the Attorney General’s investor protection bureau. Parties that obligated to register but fail to do so are subject to civil and criminal enforcement, James’s office said in a statement.

Monday’s alert comes two weeks after the attorney general filed a lawsuit against Coinseed, a trading platform for digital currency.

James alleged that Coinseed was operating a virtual currency trading business in New York, functioning as an unregistered broker-dealer for more than three years while collecting over $1 million in investors’ assets.

“We will not hesitate to take action against anyone who violates the law,” said James.

“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,” she added.

James also told investors to be cautious about investing in cryptocurrencies.

“All investors should proceed with extreme caution when investing in virtual currencies. Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains,” James said.

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