Beware of Bitcoins,Cyber Crime police warns Citizen
December 28, 2017
Cyber Crimes Facebook Page, the department warned citizens of extreme volatility of bitcoin prices, issue of legality and its lack of regulation in India among a number of reasons to avoid the popular cryptocurrency.
In a detailed post, the Cyber Crimes department warned users that Bitcoins are a ‘bubble that is about to burst’. “Since these cryptocurrency prices are not regulated, as more people enter the market lured by the high prices, the prices climb ever higher. This might lead to formation of a bubble that will eventually burst and cause widespread losses,” the post reads.
The notice also discussed the legality of the cryptocurrency variation in India. Contending that there is still confusion about its legal status, the notice says that Bitcoins have not been declared illegal but is also not recognised by the Reserve Bank of India (RBI) as a currency.
It also highlights the risk of fraud. “Aside from the operational issues of trading in cryptocurrencies, there is also a high risk of fraud. There is still a good deal of misinformation and lack of clarity regarding bitcoin trading, and fraudsters have taken advantage of this to launch Ponzi schemes, which promise ‘guaranteed high returns’. Some companies claim to double the initial investment within a very short period of time. The growing use of virtual currencies in the global marketplace makes it easy for miscreants to lure investors into Ponzi schemes. Investors should be careful to steer clear of such unrealistic promises. Keep in mind that bitcoins are highly volatile, so it’s not possible to offer guaranteed returns.” reads the notice.
It points out the risk of illegal activities thriving using cryptocurrencies. “Bitcoins users on either end of a transaction can remain relatively anonymous and cybercriminals have found ways to mask their addresses, so it can be difficult for government authorities and companies to trace such illegal activities. Since there is a lack of information about the trading parties, a peer-to-peer non-regulated system may expose the investors to unforeseen risks including breaches of anti-money laundering and financing of terrorism laws”, the notice said.
Bitcoin exchanges in India are valuing one bitcoin at over Rs. 12 lakh and the cryptocurrency is gaining prominence all over the world after an extraordinary rise in prices during the year.
It grew more than 1700% in value so far in 2017. One bitcoin was priced around Rs 64,000 on December 31 2016.
However risks of hack and volatile prices still continue to deter people from investing in the cryptocurrency. Data accessed by Reuters disclosed that a third of bitcoin trading platforms have been hacked and nearly half have closed in the six years since they burst on the scene. The risk for users is compounded by the lack of insurance to cushion the loss, even though many bitcoin companies ultimately act like banks.