Financial Markets Authority of Austria warns against using virtual currencies

The Financial Market Authority (FMA) has advised people to take extreme caution when it comes to investing in virtual currency related schemes.

The FMA explicitly advises that such offerings are currently not subject to any form of regulation, and in particular are not subject to supervision by the FMA. Consequently the risk of their misuse for criminal purposes, particularly with regard to fraud or breach of trust is therefore especially high, with any form of legal enforcement or enforcement of claims for damages sustained being particularly difficult or even impossible. The FMA therefore warns consumers to exercise the utmost caution in relation to virtual currencies.

There are many instances where people have fallen prey to bitcoin-related pyramid scams and Ponzi schemes. MMM Global, run by notorious Sergei Mavrodi is one such scam at a global level where investors, in spite of knowing the history of the company, have deposited their earnings – only to lose it.

Closer home, the Austrian FMA referred to recent warnings from other regulators in the wake of the rising popularity of a lesser-known altcoin, OneCoin. First, the Belgian Financial Services and Markets Authority issued its warning in June 2016, urging consumers against using OneCoin. Based on a centralized system unlike cryptocurrencies like Bitcoin, OneCoin has frequently seen accusations of being a pyramid-scheme. Following Belgium’s official warning, the UK’s Financial Conduct Authority (FCA) issued its own warning for consumers dealing with bitcoin.