The New York Department of Financial Services issues a consumer warning regarding meme coins, emphasizing their high volatility and risk of fraud

ChainCatcher news, the New York Department of Financial Services has issued a consumer alert warning to be cautious of "emotion-based virtual currencies," or Meme coins, emphasizing their extreme volatility, lack of regulation, and high risk of fraud, including sudden price surges and "rug pull" schemes.

The department warns that these tokens are typically controlled by a small group of insiders, created on unlicensed platforms, and are susceptible to severe price manipulation. The New York Department of Financial Services also stated that it has begun closely monitoring Meme coins, as part of scams where creators or insiders may engage in manipulative "wash trading" to create the illusion of market activity and price increases.

The public often finds it difficult to discern which Meme coins are being manipulated, and consumers should be particularly wary of the recent surge in emotion-based currencies created through unlicensed platforms that allow individuals without technical expertise to create currencies with just a few clicks. Even on regulated platforms, the prices of Meme coins are unstable and unpredictable, and they can drop significantly in a short period.