According to Odaily, the New York Financial Services Department has issued a consumer alert warning about the risks associated with 'emotion-based virtual currencies,' commonly known as meme coins. The department highlighted the extreme volatility, lack of regulation, and high fraud risk associated with these tokens, including schemes like 'pump and dump.' It noted that meme coins are often controlled by a small group of insiders, created on unlicensed platforms, and susceptible to severe price manipulation.
The department emphasized that meme coin creators or insiders might engage in manipulative 'wash trading' to create a false impression of market activity and price increases. It is often challenging for the public to identify which meme coins are manipulated. Consumers are advised to be particularly cautious about the recent surge in emotion-based currencies created on unlicensed platforms, which allow individuals without technical expertise to create currencies with just a few clicks.
Even on regulated platforms, the prices of meme coins remain unstable and unpredictable, with the potential for significant declines in a short period.