American SEC issues Bitcoin fraud warning notice

Published:  26 May at 6 PM
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A Bitcoin fraud warning by the US Securities Exchange Commission was released after revelations that crooks have been setting up scams to defraud would-be investors.

Issued following Sir Richard Branson’s recent multi-million pound stake in the alternative currency and his opening of a Bitcoin payment processor, the SEC’s warning seems to show increasing acceptance of the virtual currency. Until recently, the US government has attempted to outlaw Bitcoin trading without success.

The Bitcoin’s controversial history to date includes online exchange collapses, accusations of its use in money-laundering and the collapse of several online Bitcoin exchanges. The virtual currency has also become a target for hackers, now known to have lifted millions of pounds’ worth from its online wallets.

Recently, even more investor confusion was caused via the Bitcoin annual conference, at which chaos broke out after the resignation of a number of its front men after accusations of improper conduct. Even those committed to the currency’s survival as an investment as well as a payment option could be forgiven for drawing back.

Lack of governance and regulation are two of the virtual currency’s main drawbacks, with its representation worldwide being undertaken by an inexperienced financial forum. Also, the coin has no regulator and has no responsibility to any government on central bank, although this would seem to be one of its main attractions to the growing number of investors.

Massive fluctuations in its value since its launch haven’t muted its even-increasing popularity as an alternative investment set to become a world-wide payment method. However, at present, no government is accepting it as a currency, leaving it regarded officially as a commodity.

The official reason behind its commodity status is that commodity transactions are subject to tax as they are regarded as chargeable gains. Currency transactions, however, are tax free, making it unlikely that any world government will allow the Bitcoin’s status to change in the near future, thus adding more concerns for its investors.
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