Following weeks of volatility in the crypto markets and two high-profile legal cases involving crypto firms in New York state, New York Attorney General Letitia James has issued her starkest warning yet to all participants in the industry.

In a double alert published on Monday, James warned retail traders that they face heightened risks and low protection, both in terms of regular crypto trading and being potentially subject to "abusive and unsafe activity" by bad actors exploiting a period of widespread economic anxiety and high unemployment.

Regarding everyday trades and the allure of the 2021 crypto bull market, James's alert pulled no punches. "Even if you purchase a well-established virtual currency from a more reputable trading platform, the price could crash in an instant," the announcement notes, taking pains to stress that cryptocurrency trading is not like traditional stocks, bonds and other assets: 

"Trading in the current market exposes investors to risks, such as wild price swings, conflicts of interest among trading platform operators, and increased chances of market manipulation. Further, even ‘legitimate’ investments in virtual assets are subject to speculative bubbles."

Moreover, in the absence of central, comprehensively-regulated exchanges, James warned that those targeted by fraudsters may have "no recourse" to help from law enforcement in the state.

James's alert to cryptocurrency business operators comes in the wake of last week's settlement with Bitfinex and Tether after they were found to have misrepresented the degree to which Tether 

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 coins were backed by fiat collateral. The conclusion of the landmark case required the firms to stop servicing customers in the state of New York and to pay $18.5 million in damages to the state.

In mid-February, moreover, James sued crypto investment platform Coinseed for allegedly defrauding thousands of investors out of more than $1 million.

Given that digital currency is defined as a commodity under New York’s Martin Act, James's notice reminded broker-dealers, investment advisors and trading platforms that they are required by statute to register with the Office of the Attorney General. Should they fail to do so, they will be exposed to both civil and criminal liability and could be prohibited from future conduct, as well as be ordered to pay out restitution and damages.

The notice also cites a recent Department of Justice alert that echoed the New York attorney eneral's earlier characterization of crypto trading platforms as being “highly susceptible to abuse,” offering protections for customers that are often “illusory.