Exchange Commission (SEC) Issues Warning to Bitcoin Investors

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Exchange Commission (SEC) Issues Warning to Bitcoin Investors
Exchange Commission (SEC) Issues Warning to Bitcoin Investors

 

Exchange Commission (SEC) Issues Warning to Bitcoin Investors

In its official announcement, the US market regulator Securities and Exchange Commission or SEC issued a warning to Bitcoin investors on Wednesday. The regulatory body has cautioned investors on pitfalls associated with Bitcoin as it believes that the virtual currency has the potential to give rise to frauds and also presents high risk investment opportunities.

Bitcoin which has been facing a lot of trouble around the world as regulatory bodies are concerned about the safety and security of investors, has now faced another such trouble from the SEC. The alarming failure of Mt. Gox has just supported the concern as it led to loss of millions of dollars for investors.

According to SEC, Bitcoin is facing a lot of credibility issue after the collapse of Mt. Gox, the oldest Bitcoin exchange that once occupied more than 50% space in market. Now, investors in many countries are careful not to get into Bitcoin investment and avoid dubious organizations that are offering attractive returns on Bitcoin.

Many regulatory bodies believe that the digital currency has become a risky proposition following the fall of Japan-based Mt. Gox. Also, as the US market watchdog says that Bitcoin are not legal tender, the use and exchange of this virtual currency could be restricted by any government.

Customers Need to Beware of Investing in Bitcoin

The alert from the SEC’s Office of Investor Education and Advocacy makes it clear that investors should be aware of the potential risks of investments involving Bitcoin and other forms of virtual currency as several instances of hacking and losses in consequence show that they are receiving end often times.

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According to the SEC a new product, technology, or innovation such as Bitcoin has the potential to give rise both to frauds and high-risk investment opportunities. It further reads that potential investors can be easily enticed with the promise of high returns in a new investment space and also may be less skeptical when assessing something novel, new and cutting-edge.

A lot of concern from the US regulator is justifiable as instances show that Bitcoin exchanges have stopped operating or shut down their shops due to fraud, technical glitches, hackers or malware, etc. and these are genuine concern for investors.

The SEC clears that unlike traditional currencies, Bitcoin operates without central authority or banks and is not backed by any government and that is what a major risk is for investors.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com