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May 9, 2014updated 04 Apr 2017 4:07pm

SEC issues warning over use of Bitcoins

The US Securities and Exchange Commission (SEC) is warning investors against the use of Bitcoins citing that it is a risky business and could lead to fraud.

By Verdict Staff

The US Securities and Exchange Commission (SEC) is warning investors against the use of Bitcoins citing that it is a risky business and could lead to fraud..

SEC said, "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."

According to SEC, Bitcoin is difficult to trace, borderless and has no central authority, which make it very difficult to recover fraud losses.

Additionally, SEC is concerned over Bitcoins’ volatility, government regulation, a lack of insurance and security worries relating to exchanges and wallets.

The move by SEC comes after the recent Mt. Gox collapse, which forced China’s Bitcoin exchanges to close their accounts with several banks and tighten the use of the currency in the country.

Additionally, China Guangfa Bank and Shanghai Pudong Development Bank have also banned their customers from using their accounts for trading Bitcoins.

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