Bitcoin platforms and exchanges may soon come under the scanner of enforcement agencies after the Indian government likened them to ‘Ponzi schemes’ recently. As per a LiveMint report, the bitcoin exchanges are set to be investigated for any attempts of illegal money-pooling.
“The Securities and Exchange Board of India (Sebi) can also take an action against such exchanges if they are serving as collective investment schemes,” the report added.
Just last week the Indian government issued a statement which stated that the VCs don’t have any intrinsic value and are not backed by any kind of assets. The price of Bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices.
Emphasising the risk and illegality involved in Bitcoin trading, the finance department said in a recent statement, “Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes. VCs are stored in the digital/electronic format, making them vulnerable to hacking, loss of password, malware attack etc. which may also result in permanent loss of money. As transactions of VCs are encrypted they are also likely being used to carry out illegal/subversive activities, such as terror-funding, smuggling, drug trafficking and other money-laundering Acts.”
To be noted, it is for the first time, the Indian government has linked bitcoins to Ponzi schemes. Ponzi schemes are completely illegal, while Bitcoin and other cryptocurrencies were so far understood to belong to an uncharted territory, neither legal nor illegal.
It was also reported that Indian Bitcoin traders and their corresponding exchanges are now facing difficulties in digital payment. At times, the transactions are getting delayed by a day or more.