US regulator warns of 'fraud and manipulation' amid cryptocurrency craze
The US markets regulator has issued a warning to investors buying Bitcoin and other cryptocurrencies, cautioning that there are higher risks of "fraud and manipulation" in the market.
In some of the strongest official comments about digital currencies to date, Jay Clayton, the chairman of the Securities and Exchange Commission, warned that some trading or fundraising schemes that use them may be breaking the law.
It came just hours after the regulator stepped in to block an "initial coin offering" (ICO), a fashionable form of crowdfunding that involves companies issuing “token” assets that are similar to cryptocurrencies.
The ICO in question, for a restaurant review app, was blocked because it had not been registered as a sale of securities, in a sign that the regulator may view cryptocurrency tokens as securities, and thus subject to regulation.
"A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation," Mr Clayton said.
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"While there are cryptocurrencies that do not appear to be securities, simply calling something a 'currency' or a currency-based product does not mean that it is not a security."
The warning failed to dampen enthusiasm about Bitcoin. Its price rose above $17,000 (£12,800) on Tuesday, close to an all-time high.
It came as two of the biggest Bitcoin exchanges, Coinbase and Bitfinex, suffered outages. Bitfinex blamed the downtime on a distributed denial of service (DDOS) cyber attack.
