WILMINGTON, Del. (Legal Newsline) - Delaware Attorney General Beau Biden's Investor Protection Unit (IPU) issued an advisory on Tuesday to investors considering the use of Bitcoin and other virtual currencies.
Virtual currencies, which include digital currencies and cryptocurrencies, have gained in popularity and controversy. The forms of currency are electronic mediums of exchange bought or sold through virtual currency exchanges. The currency can be used to buy goods or services where accepted.
More merchants, businesses and other organizations currently accept Bitcoin, one of the most popular virtual currencies, in lieu of traditional currency.
"Investing and trading in virtual currencies carries substantial risks," Biden said. "Unlike traditional currency, these alternatives are not issued by a governmental authority or backed by governmental guarantees and are subject to little or no oversight."
One of the largest Bitcoin exchanges, MtGox, recently shut down after it claimed it fell under hacker attack. The exchange lost more than $350 million of virtual currency.
Biden's IPU reminded Delawareans that virtual currency accounts are not ensured by the Federal Deposit Insurance Corporation (FDIC); virtual currencies are not backed by any assets, legal rights or guarantees; virtual currencies are extremely volatile; and that virtual currency holdings are vulnerable to hacking attacks.
The IPU prosecutes securities fraud and licensing violations by investment brokers and advisers.