A new Bitcoin scam warning is issued by bank regulators as two Nigerian men were arrested over allegations of money laundering and fraudulent transactions.

Bitcoin scam alert

Bitcoin scam

The American Securities Exchange Commission (SEC) issued the alert after discovering investment scams involving new electronic cash that uses large-scale computing. Fraudsters, it said, tout huge profits from bitcoin (BTC) trades or mining to unsuspecting victims.

The alert came after Nigerians Onwuemerie Ogor Gift and Kelvin Usifoh had been indicted by the U.S. state of Oregon for allegedly operating a fraudulent BTC investment scheme.

The two were accused of soliciting BTC investments through websites promising 20-50% return to investors, with instant withdrawals and ‘zero’ risk. Reports said that victims were instructed to deposit more BTC so they could receive their investment proceeds. Unfortunately, no funds were returned to the victims.

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According to prosecutors, the accused stole 10.88 bitcoins amounting to almost £45,000 from the three victims in just more than six months.

Bitcoin scam: A growing threat

Bitcoin scam fraud

Bitcoin scam is an increasing threat already causing British investors to lose about £1.2billion to fraudulent online transactions.

NPCC National Cyber Crime Programme announced in April that a dedicated Cyber Crime Unit is in place in every police force in Wales and England

“I am absolutely delighted to announce this significant step forward in improving the overall response to cyber crime in England and Wales,” said Chief Constable Peter Goodman.

Despite the inherent risk surrounding BTC, the use of this digital cash is growing. In fact, it has hit a new high this week at $8,400 from sub $6,000.  As compared last week, it rose to $8,100 from $4,000 on May 14.

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BTC is a cryptocurrency that makes use of encryption to control the creation of new units and secure transactions.

Bitcoin’s independence from established financial systems makes it more appealing.