FINRA Warns of Risks Related to Trading Bitcoin

Posted on March 18th, 2014 at 9:55 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

Bitcoin, a five-year-old technology, purports to offers a way for people to conduct transactions over the Internet, with bitcoins that they can buy and sell online or in person. However, Bitcoin can also expose people to significant losses, fraud and theft, and the lure of a potential quick profit should not blind investors to the virtual currency's significant risks. For example, Mt. Gox, once the world's largest bitcoin exchange, ceased operations, and soon after filed for bankruptcy in Japan and the United States. Mt. Gox said it may have lost 750,000 bitcoins, worth hundreds of millions of dollars, in a hacking attack.

FINRA has issued a warning to bitcoin investors. FINRA urges investors to avoid speculating with money they cannot afford to lose, and that platforms for the currency can be hacked or fail. Moreover, speculators drawn to bitcoin trading should understand that bitcoin prices have fluctuated widely.Investors looking to get in on the ground floor of a Bitcoin-related company should realize that fraudsters may see the latest digital currency trend as a chance to steal their money.

In a related matter, the SEC had halted trading in securities of Imogo Mobile Technologies Corp, which was testing a mobile bitcoin platform, amid questions about its business. The SEC also cautioned that Bitcoin has been used in drug dealing, money laundering and other crimes, and that law enforcement actions could leave people unable to use or trade their bitcoins.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston

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