The US Securities and Exchange Commission sounded a warning Thursday about cryptocurrency risks, urging investors to “exercise caution” in dealing in units like bitcoin.
State and federal regulators may not be able to recoup any lost investments from illegal actors, the markets watchdog said.
Many promoters of initial coin offerings and other cryptocurrency investments are not following federal and state securities laws, SEC Chairman Jay Clayton and Commissioners Kara Stein and Michael Piwowar said in a statement, Reuters reports.
While regulators are trying to police these quickly growing markets, the SEC urged investors to be vigilant.
“The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment,” the officials said.
The comments came after bitcoin’s wild ride last year fueled concerns about a speculative bubble.
Bitcoin, the biggest cryptocurrency, surged in mid-December to nearly US$20,000, but then dropped to less than US$12,000 at the end of the month. On Thursday, it was trading at around US$14,500.
Overall, the virtual currency saw its value jump by more than 1,000 percent in 2017.
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