Austrian finance watchdog Financial Market Authority (FMA) is a bit late to the game. The regulatory body has issued a warning against the use of virtual currencies, including Bitcoin. The latest warning is similar to the words of caution used by various central banks and government institutions across the world. While rest of the regulatory and governance bodies issued the warning way back in 2014, FMA has decided to do at a time when Bitcoin is gaining popularity among masses.
The warning, however, is in response to rising incidents crypto-frauds, especially the high yield investment schemes. The FMA’s recent statement advises extreme caution while dealing with virtual currencies and investment models built around them. As the virtual currency sector is unregulated and unsupervised, investors are vulnerable to abuse and fraud. It also means that the investors are not eligible to receive any compensation for damages or losses incurred from investing in virtual currency-based schemes.
There are many instances where people have fallen prey to Bitcoin-related pyramid scams and Ponzi schemes. MMM Global, run by notorious Sergei Mavrodi is one such scam at a global level where investors, in spite of knowing the history of the company, have deposited their earnings – only to lose it.
It is not just the FMA which is currently investigating these investment schemes within Austria. The good samaritans within the Austrian Bitcoin community is also spreading awareness about fraudulent investment schemes.
FMA, jointly with the public prosecutor is currently evaluating the business models of cryptocurrency investment schemes to determine whether they constitute a criminal offense.
It is always advisable for potential investors to do a thorough research about the investment schemes by reading reviews and even enquiring about it within the local cryptocurrency community before investing. Also, the schemes which are too good to be true are generally scams and it serves better to stay away from them.
Ref: Tiroler Tageszeitung | Image: Shutterstock