12/9/2015 9:46:06 AM
Virtual currencies such as Bitcoin are gaining in both popularity and controversy. Because these are new and complex financial products, they can potentially be exploited for fraudulent or high-risk investment schemes that victimize unwary investors.
The Minnesota Department of Commerce is urging Minnesotans to proceed with caution and understand the potential risks of any investment or transaction involving a virtual currency such as Bitcoin.
Virtual currency is an electronic medium of exchange that, unlike real money, is not issued, controlled or backed by a central government or central bank. These currencies can be bought or sold through virtual currency exchanges, and they can be used to purchase goods or services from businesses that accept them.
Like any investment, those tied to virtual currency have risks. Some key issues you should consider before investing in any product containing virtual currency include:
Virtual currency can be used as an investment in essentially the same way as gold or other commodities. Investors may purchase virtual currency with the expectation that it will sell for a higher price in the future. Virtual currency may also be used in Exchange Trade Funds (ETFs) and financial derivatives.
These investments can be highly speculative and risky because virtual currency values often fluctuate dramatically and unpredictably.
As with any investment, you should be alert for warning signs of potential fraud such as unsolicited sales pitches or promises of “guaranteed” profits. If an offer sounds too good to be true, it probably is.
If you believe you may have been the victim of a scam or fraud, contact the Commerce Department’s Consumer Services Center by email at email@example.com or by phone at 651-539-1600 or 800-657-3602 (Greater Minnesota).
Banking & Finance