The Tennessee Department of Commerce & Insurance (TDCI), in collaboration with the North American Securities Administrators Association (NASAA), has issued an Informed Investor Advisory to alert individuals about the potential risks of investment scams within the metaverse. The metaverse, a virtual reality space that provides immersive experiences, has opened up new investment avenues such as virtual real estate and non-fungible tokens (NFTs). However, due to its unregulated nature and the global reach of online platforms, the metaverse presents opportunities for scammers to obscure their fraudulent activities.
The advisory emphasizes that despite the allure of the metaverse’s innovative technology, traditional financial scams persist, often repackaged to exploit the virtual environment. TDCI Commissioner Carter Lawrence advises Tennesseans to approach metaverse investments with caution, highlighting that no investment can guarantee against loss and that unrealistic promises of high returns with little risk should be viewed skeptically.
Investors interested in the metaverse are encouraged to take precautionary measures to safeguard against scams. The advisory provides several tips, such as understanding and being comfortable with the inherent risks of investments, confirming that the investment offeror is registered with securities regulators, and exercising discretion when engaging with avatars or user representations in the metaverse. Furthermore, it is advised to be skeptical of crypto or NFT investment offers within the metaverse and to stay alert to misinformation, including fabricated news about celebrity endorsements or involvement in technology investments.
TDCI Assistant Commissioner for Securities Elizabeth Bowling underscores the importance of applying the same vigilance and critical assessment to virtual world investments as one would in the physical world. She urges investors to be mindful of fraud indicators and to thoroughly evaluate all available information before committing to any investment opportunities in the metaverse.
