Federal Securities and Exchange Commission alerts investors about potential for Bitcoin-related fraud

U.S. warning follows Ponzi scheme lawsuit, exchange bankruptcy
By , Coin World
Published : 05/08/14
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Anyone featuring physical bitcoins in their coin collection should be on notice.

The U.S. Securities and Exchange Commission issued an investor alert on May 7 warning Bitcoin investors that their holdings could expose them to “frauds and high-risk investment opportunities.”

It is not rare for new innovations to be used by scammers, the SEC states.

“Fraudsters may entice investors by touting a Bitcoin investment ‘opportunity’ as a way to get into this cutting-edge space, promising or guaranteeing high investment returns,” the SEC alert reads. “Investors may find these investment pitches hard to resist.”

Bitcoin is a virtual currency obtained with traditional currencies and exchanged for goods and services provided by sellers that accept it. Preev.com, a bitcoin value converter, pegged the value of one bitcoin at around $440 on the afternoon of May 8.

While Bitcoin is an online currency that investors store in virtual wallets, there is a collecting niche for hard copies.

Physical bitcoins, which are typical online bitcoins paired with a physical representation, can be spotted for sale on eBay. Some even have been graded by ANACS.

Inside the physical bitcoins produced by the company Casascius until last year is a “private key” card with a code required for use of the bitcoin. To obtain the code and use the bitcoin, a hologram seal on the coin must be broken.

Casascius ceased sales of bitcoins containing private keys in November 2013, its website states. 

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