Topic: Bitcoin triggers ponzi fear: Government in a huddle, plans crackdown (Read 176 times)

Have you been invited to invest in a Bitcoin-linked investment scheme?. Watch out, it could be just another ponzi scheme riding on the latest craze..

Bitcoin , the virtual cryptocurrency, is surging higher and higher, leading to fears that it can lead to e-ponzi schemes. The government is currently in a huddle to find out how to create safeguards against such a risk.Bitcoin hit another all-time peak on Tuesday, two days after the launch of the first-ever bitcoin futures on a US exchange and ahead of the start of another futures contract next week, as investors grew optimistic that the $20,000-mark is within reach..

Extraordinary surge in Bitcoin prices has caught the fancy of the general public which is vulnerable to exploitation.In addition to financial risks — the value of bitcoins has seen huge falls within hours — the regulators are worried about their use for illicit and illegal activities, subjecting the users to an unintentional breach of laws against money laundering and terror finance.Concerns also emanate from some unscrupulous entities indulging in illicit money-pooling activities—commonly known as ponzi schemes—with the promise of huge returns from investment in bitcoins and other variants, which they claim are minted through blockchain, a distributed ledger technology that was created to mint bitcoins and comprises of extremely complex algorithms with several thousand nodes for each chain.There is a suspicion that some so-called cryptocurrencies and bitcoin investments may actually have nothing to do with any blockchain-developed virtual currency and are just new ways devised by scamsters to ride the wave and what they may be offering could be 'e-ponzi' schemes.The financial regulators are worried that a complete lack of regulatory regime for such cryptocurrencies may give rise to 'e-ponzi' schemes.The financial sector watchdogs, including RBI and Sebi , as also various government agencies, will soon get into a huddle to prepare a framework to safeguard the gullible investors and to clamp down on the fraudsters who may try to manipulate the regulatory gaps, PTI reported, quoting a senior official.There are quite a few proposals on the table and those include applying to cryptocurrencies the existing regulations aimed at checking the spread of ponzi schemes or illicit money-pooling activities, money laundering and black money generation and circulation, another official said.The jury is still out on whether such virtual currencies should be allowed as legal payment tender or investments, though there are also suggestions from some quarters for allowing them with necessary checks and balances.The Income Tax Department conducted survey operations at major Bitcoin exchanges across the country on suspicion of alleged tax evasion. They said various teams of the sleuths of the department, under the command of the Bengaluru investigation wing, visited the premises of nine such exchanges in the country including in Delhi, Bengaluru, Hyderabad, Kochi and Gurugram..

https://economictimes.indiatimes.com/news/economy/policy/bitcoin-triggers-ponzi-fear-govt-in-a-huddle-plans-crackdown/articleshow/62064820.cms