Daily Mail

Warning over high risk digital currency craze that’s backed by celebritie­s

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DIGITAL currencies such as bitcoin are ‘very high risk’ and savers should be prepared to lose all their money if they invest in them, according to the City watchdog.

A wave of celebritie­s have jumped on the crypto-currency bandwagon, including boxer Floyd Mayweather, hotel heiress Paris Hilton ( left) and lingerie tycoon and Tory peer Michelle Mone – dubbed Baroness Bra ( right).

It is feared the hype has attracted the attention of regular investors as well as profession­als and the super-rich – triggering yesterday’s stern interventi­on from the Financial Conduct Authority.

At the heart of the issue are so-called initial coin offerings, or ICOs, through which companies raise money from investors by selling them digital ‘tokens’. Instead of buying these tokens with currencies like sterling, euros or dollars, investors pay in establishe­d crypto currencies including bitcoin or ether.

The FCA said these tokens can ‘in some cases offer no discernibl­e value at all’ and are wide open to fraud.

The watchdog warned: ‘You should only invest in an ICO project if you are an experience­d investor, confident in the quality of the ICO project itself, and prepared to lose your entire stake.’

Socialite Hilton last week said she was investing in something called Lydian Coin, while Baroness Mone has launched a £250m luxury property developmen­t in Dubai where the homes will be priced in Bitcoin.

But Mark Tinker, a fund manager at Axa Investment Managers, said the ‘mania’ surroundin­g these digital currencies ‘has all the aspects of a classic bubble’.

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