Alabama state regulator Joseph Borg will reportedly issue a warning/consumer alert on digital currency (the most popular of which being bitcoin) Tuesday.
The alert will advise both consumers and investors who have issues cashing out of bitcoin or troubles withdrawing to stop trading, at least until the problems they’re experiencing get sorted out.
Borg has served for 20 years on the Alabama Securities Commission, and is presently the administrator, and is known for forming the task force that brought down Jordan Belfort’s Stratton Oakmont investment firm (a story chronicled in the 2013 film The Wolf of Wall Street).
The advisory comes as Tokyo-based bitcoin exchange Mt. Gox has been have major issues — preventing users from withdrawing their funds.
“Dealing with these exchanges should be no different than dealing with your bank or your financial institution,” Borg said to MarketWatch. “…and we would tell you that you never do business with a bank that does not know you have money on account, or that is asking for your passwords or that doesn’t seem to remember the account links you established when you started the account. Now we are saying that you should never do business with a bitcoin exchange that has the same problems, or that has to ask you how much bitcoin you’ve got.”
The advisory will likely echo the sentiments of central banks around the world — sentiments we’ve been hearing for weeks on end. But by no means will Borg look to prevent the use of digital currency:
“If someone wants to give this a try and they know what they are getting into, fine,” he noted. “I can’t say this is an investment scam or a scheme. But I can say something here that I think applies to all investments—but especially anything where you really can’t expect to have any legal recourse if things go bad: if you try trading these things and you can’t get your money out, maybe you should stop right there until you can. Sure, it’s a new thing, but that doesn’t mean that the same old warning signs won’t still be a clue that you are headed to trouble if you keep going.”