Scamwatch — the website run by Australian Competition & Consumer Commission (ACCC) — said 1,289 complaints were lodged against Bitcoin-related scams in 2017, with an accumulated loss of $1,218,206 AUD ($966,000 USD). ACCC is the national consumer watchdog which provides information to caution consumers about how to recognize and report scams.
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John Price, Australian Securities and Investments Commission (ASIC), has already released a warning for those who plan to invest in bitcoin. He told the ABC’s current affairs program 7.30:
“These are quite speculative products and they can be quite high-risk. It’s been quite well documented that some of these products are scams, so please don’t invest unless you’re prepared to lose some or all of your money.”
Crypto Industry’s Lack of Regulation
Akram Bekzada, a crypto investor, claimed he incurred a loss of $20,000 AUD at former Australian bitcoin exchange Igot. In addition, he pointed out that unregulated exchanges are also a big problem in the market. According to Bekzada, when the bitcoin price dropped he tried to sell his holdings but the transaction would not go through.
“One of the main selling points of Igot was that they’re an Australian entity, and this is how they advertised, this is how they got a lot of people’s trust. Many of the customers are dumbfounded as to why nothing has been done.Nobody wants to get their money stolen, so yeah, it’s not a good feeling.”
Bekzada added: “Everyone expected so much more of Australian authorities.”
However, a search online found Igot has started a similar business with a new name — Bitlio. Bitlio’s lawyer informed 7.30 that both companies are different and don’t have any connections. However, when visiting Igot’s former domain, users are presented with the message “Igot is now Bitlio”.
Bitlio offered Igot customers a deal to transfer their crypto assets to the Bitlio exchange. However, Igot customers were unable to convert their digital assets.
Bitlio claims over 90 percent of Igot customers have transferred their holdings to their exchange platform.
Australian Government Steps in to Fight Scams
Crypto business that suddenly “go dark” like Igot have prompted the Australian financial watchdog AUSTRAC (Australian Transaction Reports and Analysis Centre) to take action to safeguard investors. From April 2018, crypto exchanges will be obligated to report suspicious transactions with customers’ data to AUSTRAC.
Angus Taylor, the federal minister for cyber security, praised the move from AUSTRAC and said:
“We’ve had a lot of cooperation from the cryptocurrencies because they know they need to be legitimate, they know they need to be part of our financial system, and they know they don’t want to be facilitating illegal and criminal activity”
He added that it’s necessary for the Australian government to set up a regulatory framework surrounding criminal activities in the crypto space.
In alignment with Taylor’s comments, Brad Brown from AUSTRAC stated that digital currencies are still used in criminal activities like money laundering and terrorism — though to date, there’s no evidence cryptocurrencies are used disproportionately compared to the regular financial/banking system.
It is clear that the cryptocurrency and blockchain industry is still growing, but there is still a long way to go before cryptocurrencies are accepted everywhere under financial regulations. However, crypto enthusiasts are optimistic that the day will come where cryptocurrencies work in parallel with the existing financial market.
Is it too late for governments to regulate digital currencies? Let us know your opinion in the comments section.
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