Newsletters
News & Information for Technology Purchasers NewsFactor Sites:       NewsFactor.com     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
   
This ad will display for the next 20 seconds. Click for more information, or
Home Enterprise I.T. Cloud Computing Applications Hardware More Topics...
GET RECOGNIZED.
Let an ISACA® certification
elevate your career.

Register today and save
Cloud Computing
DDoS Protection Powered By Verisign
Average Rating:
Rate this article:  
SEC Warns of Fraud, Other Risks with Bitcoins

SEC Warns of Fraud, Other Risks with Bitcoins
By Barry Levine

Share
Share on Facebook Share on Twitter Share on Linkedin Share on Google Plus

"Using bitcoin may limit your recovery in the event of fraud or theft," the SEC warned. The reasons, the federal agency said, include the fact that third-party wallet services, payment processors and bitcoin exchanges may be unregulated or operating illegally. Additionally, law enforcement in a bitcoin crime could face a number of challenges.
 


The U.S. Securities and Exchange Commission weighed in on bitcoins Wednesday. In an Investor Alert, it said the virtual currency "has the potential to give rise both to frauds and high-risk investment opportunities."

This new alert complements an earlier one from the federal agency, entitled "Ponzi Schemes Using Virtual Currencies." The SEC also referenced warning alerts on bitcoin from the Financial Industry Regulatory Authority and the North American Securities Administrators Association.

In this alert, the SEC assembled a sizable list of issues. It pointed out that "innovations and new technologies are often used by fraudsters to perpetrate fraudulent investment schemes."

Law Enforcement Challenges

Warning signs of such investment fraud, the SEC said, include a "guaranteed" high investment return, unsolicited sales pitches, unlicensed sellers, no net worth or income requirements, pressure to buy immediately, and a deal that "sounds too good to be true."

"Using bitcoin may limit your recovery in the event of fraud or theft," the SEC warned. The reasons, the agency said, include the fact that third-party wallet services, payment processors and bitcoin exchanges may be unregulated or even operating illegally.

Additionally, law enforcement after a bitcoin-related crime could face a number of challenges. This includes the difficulty in tracing money because traditional financial institutions are not involved, the international scope, no central authority for the decentralized currency, and the problems that law enforcement officials may have in seizing or freezing bitcoins.

And that's only part of the SEC's issues with bitcoins. The currency also has unique risks, the SEC said, including no governmental insurance for accounts holding bitcoins as there is in traditional bank accounts. There's also a history of volatility in the exchange rate, including a drop in a single day of more than 50 percent.

Plus: Governments of any kind might restrict bitcoin use, and the currency, being new, does not have "an established track record of credibility and trust."

FEC, Defense, Wall Street

But not all U.S. federal agencies have the same approach as the SEC. On Thursday, for instance, the Federal Election Commission -- by a unanimous vote -- gave its approval to the use of bitcoins in donations to political committees.

The Defense Department is reportedly looking at bitcoins to see if they pose a threat to national security. A key concern is the anonymity, because it raises the possibility of terrorist cells transmitting money without security officials being able to trace it.

On Wall Street, Bloomberg News reported Wednesday, such financial services as payment system FIS are investigating whether it can adapt bitcoin's ability to securely move funds on existing networks.

In China on Thursday, two banks -- China Guangfa Bank and Shanghai Pudong Development Bank -- said Thursday they would not allow their customers to use their bank accounts for bitcoin trading.

And, earlier this week, researchers at the security training Sans Institute reported that a low-end, Net-enabled digital video recorder had been infected with malware that secretly mined bitcoins. There have previously been reports that other devices, including Android smartphones and Linksys routers, had similarly been compromised with bitcoin-mining malware.
 

Tell Us What You Think
Comment:

Name:



Salesforce.com is the market and technology leader in Software-as-a-Service. Its award-winning CRM solution helps 82,400 customers worldwide manage and share business information over the Internet. Experience CRM success. Click here for a FREE 30-day trial.


 Cloud Computing
1.   Concerto 2200: Dedupe, Compression
2.   Office 365 Tailored for Attorneys
3.   Apple Opens China iCloud Data Center
4.   Samsung Buys SmartThings
5.   Cisco Axes 6,000 Employees


advertisement
Concerto 2200: Dedupe, Compression
Firms save money by saving space.
Average Rating:
Samsung Buys SmartThings
To allow people, appliances to interact.
Average Rating:
Cisco Axes 6,000 Employees
Company is facing declining profits.
Average Rating:


advertisement
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Chinese Hackers Nab Info on Millions of U.S. Patients
A group of Chinese hackers has stolen the personal information, including names and Social Security numbers, of about 4.5 million patients at hospitals operated by Community Health Systems.
 
Premier FBI Cybersquad in U.S. To Add Agents
After helping prosecutors charge Chinese army officials with stealing trade secrets from major companies and by snaring a Russian-led hacking ring, the premier FBI cyber-squad is getting a boost.
 
Apple Opens iCloud Data Center in China
Treading lightly, Apple acknowledged it has started to store encrypted iCloud personal data of some Chinese users on servers in mainland China, operated by the state-owned China Telecom.
 

Enterprise Hardware Spotlight
Compression, Deduplication Come to Violin Concerto 2200
Violin Memory has announced that data deduplication and compression capabilities are now available on its Concerto 2200 solution. Typically, users will experience deduplication rates between 6:1 and 10:1.
 
Cisco Axes 6,000 Employees in Restructuring Plan
Faced with declining profits, Cisco is laying off up to 6,000 employees in the months ahead -- a whopping 8 percent of its global workforce. That's in addition to the 4,000 jobs Cisco cut last year.
 
Web Slows, Have Internet Routers Reached The Limit?
If you encountered problems connecting to the Internet on August 12, you weren't alone. Networking experts blame the wide-scale slowdown on outdated routing systems that are reaching their limits.
 

Mobile Technology Spotlight
HTC Debuts Windows Phone Version of One M8 Smartphone
HTC is bringing the Windows Phone mobile OS to its flagship One M8 device -- the first time any mainstream flagship smartphone has been offered with a choice of operating systems.
 
Verizon Earns Top Rating in Mobile Network Comparison
A new report says Verizon Wireless was the top-performing U.S. cellphone service provider in the first half of 2014, on a nationwide and state-by-state basis, as well as in metro areas.
 
Sprint Comes Out with Data Guns Blazing
As its new CEO promised, Sprint has rolled out a new aggressively competitive price plan. The shared data plans promise twice the high-speed data and at lower prices than AT&T and Verizon Wireless.
 

Navigation
NewsFactor Network
Home/Top News | Enterprise I.T. | Cloud Computing | Applications | Hardware | Mobile Tech | Big Data | Communications
World Wide Web | Network Security | Data Storage | CRM Systems | Microsoft/Windows | Apple/Mac | Linux/Open Source | Personal Tech
Press Releases
NewsFactor Network Enterprise I.T. Sites
NewsFactor Technology News | Enterprise Security Today | CRM Daily

NewsFactor Business and Innovation Sites
Sci-Tech Today | NewsFactor Business Report

NewsFactor Services
FreeNewsFeed | Free Newsletters

About NewsFactor Network | How To Contact Us | Article Reprints | Careers @ NewsFactor | Services for PR Pros | Top Tech Wire | How To Advertise

Privacy Policy | Terms of Service
© Copyright 2000-2014 NewsFactor Network. All rights reserved. Article rating technology by Blogowogo. Member of Accuserve Ad Network.