Virtual currency trading is a lucrative activity, which comes with its own risks. If not chosen properly, the trading and investment platforms themselves may pose a much greater risk than the volatility associated with cryptocurrencies.
The increasing number of virtual currency based Ponzi schemes that promise huge returns have got law enforcement agencies concerned. These schemes are prevalent across the globe, attracting millions of dollars in investment. The Ministry of Public Security in Vietnam has warned people about the risks of trading and investing virtual currencies.
In an interview with one the Vietnamese media outlets, Lieutenant Colonel Nguyen Thi Thu Hang – Head of Police Financial Cybercrimes Prevention Department has spoken about the risks associated with virtual currency trading. The department, under the jurisdiction of Ministry of Public Security, Vietnam has been constantly monitoring various trading platforms and investment schemes involving virtual currencies. In the due course, they have also arrested few people for operating Ponzi schemes.
The police department recently shut down gold889.com and arrested its promoters for running a fraudulent investment scheme. In the interview, Lt. Col Thu Hang explains the business model of gold889.com and the way they offered payouts to earlier investors with fresh funds deposited by new investors and so on.
Vietnam has many Bitcoin community banks and exchanges operating in the country. Some of the Bitcoin platforms like Airbitclub and BitKingdom operate on a multi-level model, allowing people to borrow funds at an interest. The high-interest rates combined with volatile nature of Bitcoin may force the borrowers to pay anywhere between 30% to 80% per year. The absence of clear digital currency regulations makes it hard for the police and other law enforcement agencies to protect the interest of investors and borrowers.
Lt. Col. Thu Hang explains that Bitcoin and other virtual currencies are not recognized under the laws of Vietnam. The lack of regulation makes it difficult for genuine Bitcoin companies to register and operate their platforms legally. At the same time, it also creates a huge risk for the community members as there is no legal protection for their investments. The existing loophole is being exploited by criminals to fleece investors of their money through virtual currency Ponzi schemes.
She also reiterates the warning issued by the Ministry of Public Safety, requesting individuals and organizations not to invest, hold or carry out transactions involving Bitcoin or other virtual currencies due to increased risk associated with them.