Metaverse is ripe for investment scams, regulators warn

Don’t take investment advice from — or get scammed in — the metaverse, the North American Securities Administrators Association (NASAA) warned today.

In an investor alert, the umbrella group of U.S. state and Canadian provincial regulators called on investors to guard against investment scams and frauds in online virtual worlds.

“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,” said Melanie Senter Lubin, president of NASAA and Maryland Securities Commissioner, in a release.

NASAA said that investment opportunities, such as virtual real estate, non-fungible tokens (NFTs) and other schemes, are being pitched in the metaverse — yet regulators warn that this space may be particularly risky for investors.

For one, they said that “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.”

At the same time, it warned that the lack of regulation, coupled with the ability to operate from anywhere, “make it easy for fraudsters to hide.”

Among other things, the advisory warns investors to avoid investment advice that’s offered in the metaverse, to be wary of crypto and NFT investment offers, and to understand that scammers may use fake online articles and social media posts to create buzz by falsely associating investment schemes with celebrities.

“Investors need to be wary of any investment that is promising unrealistic returns with minimal risk,” said Lubin.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.