- Investor Education and Protection Fund(IEPF) Authority has said that Crypto currency is a ponzi scheme and should be banned in India to protect the interests of investors.
- IEPF has also said that crypto currencies are based on blockchain technology and there are concerns about its viability in the long-term due to risk to investors,especially considering the huge variations in the prices.
- In 2018,Government had formed a panel under Finance Secretary to draft regulations for cryptocurrencies.Further,the government is also coming up with a mobile app to safeguard the interests of small investors who might end up losing money by investing in fraudulent schemes.
- Crypto currency is a digital currency.It allows transacting parties to remain anonymous while confirming that the transaction is valid one.It is not owned or controlled by any institution including both government institutions and private institutions.Various cryptocurrencies used globally are Bitcoin,Ethereum and Ripple.
- A Ponzi scheme is an investment fraud where clients are promised a large profit at little to no risk.Companies that engage in a Ponzi scheme focus all of their energy into attracting new clients to make investments.
- Ponzi schemes rely on a constant flow of new investments to continue to provide returns to older investors.When this flow runs out,the scheme falls apart.There is no actual effective revenue generation.
5 min read