After a Taneytown teacher died by apparent suicide while under investigation for alleged financial fraud and child sex abuse, investors across six states told The Baltimore Sun Justin Rieger had invested their money in the cryptocurrency market.

The Sun interviewed two crypto experts about what cryptocurrency is, what investors should know about digital currencies, and why they can be riskier than traditional investments.

Jimi “Fitz” Fitzgerald is the host of “The Crypto Fitz Show and Podcast” where he decodes complicated financial terms. Daren Firestone is a partner at Levy Firestone Muse, where his practice focuses on representing whistleblowers in the crypto industry. Their answers have been edited for space and clarity.

Is crypto a digital stock market?

FITZ: Sort of. Stock markets are numerous and very different around the world. In the U.S. we have the Dow, S&P 500, NASDAQ, Russell 2000, and many others. Traditional stock markets are closed more hours than they are open. The crypto market is a worldwide 24/7 marketplace with all buying and selling out of the same pool of assets.

FIRESTONE: There are digital markets, called exchanges, where you can buy and sell crypto. These markets are similar to stock markets. However, the question of whether crypto is similar to stock is a matter of great controversy. Courts have decided whether cryptocurrencies are securities [and stocks are a type of security] on a case-by-case basis. Nearly every court has decided that the crypto it analyzed was a security. But the Securities and Exchange Commission is currently rethinking whether it agrees with these courts. The decision it makes will affect how crypto is regulated.

Is crypto investing risky? Why?

FITZ: Crypto investing is very volatile because of its accessibility to billions of people simultaneously around the world, yet no different than the risk of traditional finance markets that always go up and down.

FIRESTONE: Most crypto companies do not release audited financial statements. Some do not reveal the identities of their executives. Some have no home offices. Many are located in jurisdictions where there is little recourse if your money is stolen. So, it’s difficult to know what you’re investing in, and if you’re ripped off, it’s hard to get your money back. Also, cryptocurrencies are easy to create and often hyped by paid celebrities or crypto-influencers [who often don’t reveal their compensation]. That means there are a lot of unverifiable claims made by people with large followings. Finally, cryptocurrencies often have large, rapid and unpredictable price swings that are more likely to be tied to a tweet than to business fundamentals.

Why don’t you need a license to trade crypto?

FITZ: Exchanges and money service companies need licenses to trade crypto but individual retail investors do not if they are trading peer to peer.

FIRESTONE: Who qualifies as a broker-dealer under the securities laws and, therefore, must register with the SEC is another matter of great controversy that turns on whether cryptocurrencies are securities. Generally speaking, underwriters, brokers, market makers and other dealers doing business in securities in the United States must register as broker-dealers. But if a cryptocurrency is not a security, then no registration with the SEC is necessary.

Why does the value of crypto change?

FITZ: Cryptocurrencies are no different than a stock. Many variables affect the price including market cap, number of tokens [or digital currency] issued, what the utility is of the crypto [how easily you can trade the currency], is there a buzz about the token and what personnel are behind the project. Remember, the only truly decentralized [meaning not owned by a company but instead by users] crypto commodity is bitcoin with a capped supply of 21 million with no company or employees. Just millions of computer nodes around the world running the immutable, cross border, peer-to-peer network.

FIRESTONE: The value of crypto, like anything else, is equal to what someone will pay for it. In general, people pay more for crypto when they think they will be able to sell it at an even higher price. Many factors enter into that determination, including market trends, world events, interest rates, endorsements, strategic partnership announcements, etc. This is true for stocks as well. The main difference is that the price of a stock is typically somewhat related to the company’s expected future earnings. In crypto, that is rarely the case.

Can you trace where crypto investments go?

FITZ: Yes. Each transaction on a blockchain has a unique algorithm identifier of letters and numerals. An individual has a send and receive key unique to that person [similar to a digital password] and the only way to connect the private keys to that person is if their private key has been revealed.

FIRESTONE: It is very difficult to trace crypto, especially when someone wants to cover their crypto tracks. To trace, you need to know how to use often complicated or expensive crypto tracing software. Even if you are a crackerjack tracer, criminals who want to hide their tracks have numerous tricks at their disposal to throw you off, including, mixers, security enhanced tokens, chain-hoping, over-the-counter transactions, using non-Know Your Customer exchanges [which are required to verify the identity of customers’ financial companies or exchanges], and so on. There’s a reason why crypto is the preferred currency of money launderers, sanctions evaders, cybercriminals, corrupt politicians and so many other criminals: It’s difficult to follow the money.

Have a news tip? Contact Riley Gutiérrez McDermid at rmcdermid@baltsun.com, 443-571-6987 or on X as @rileymcd.