Bitcoin Related Ponzi Schemes To be Axed By Sebi

Recently, SEBI announced that they will take a strict action on unauthorized initial Bitcoin proposals with a false promise of public investments and other virtual currencies amongst many such schemes in the absence of any regulatory regime.

Bitcoin Related Ponzi Schemes To be Axed By Sebi

According to top officials, SEBI is not interested to take on the role of a regulator for such ‘trading’ which are at present being offered on many exchanges although are there being no rules in this respect as Bitcoin or any such crypto currency is not an approved product by RBI or any other agency. But, at the same time, SEBI cannot allow naïve investors to be taken for a ride with such unlawful offerings by these exchanges and those who claim to trade on crypto currencies.

The officials further added that many of such agencies are suspected to be indulged in fraudulent activities without essentially minting any such virtual currencies, which require very complex algorithms. They also said that some coin offerings made in India are nothing but fake Ponzi or pyramid schemes while many others are plain scams without any such currency being in play. RBI has already made public of its disapproval for all such currencies.

The regulators and government agencies are discussing whether to impose tax as it would give a legal status to such currencies as huge risks are involved including money laundering and terrorist financing, attached with such activities. Nevertheless, the officials added that there is a kind of agreement emerging about endangering such trading to laws against black money, money laundering and frauds.

The RBI has been issuing warnings since 2013, but now the risks have multiplied manifold in the valuation of many such virtual currencies and through Initial Coin Offerings (ICOs), some entities are raising funds from investors as they lured into huge returns from Bitcoins.