Analyst Raises Red Flags About Diamond-Backed BitGems, Warns of Scam

Finance and Trade
17/01/2016 13:33

On the eve of the January 18 public launch of the first diamond backed cryptocurrency in the world, the PinkCoin, by Precious Investments (OTC Markets: PNIK) and its subsidiary BitGem Asset Management Ltd. (BAM), fancy colored diamond investment consultant Yaniv Marcus has raised multiple red flags about the investment scheme, warning of a potentially major scam. "Precious Investments Inc. is continuing to mislead investors with innovation and a colorful website. Don’t let yourself be fooled by a well-dressed diamond investment scam." He questions: the financial history of the company, lack of transparency about the diamonds themselves, exaggerated claims about their appraiser, how the diamonds were acquired at a hefty discount, and the terms of the insurance policy with Lloyds.

He also points out that the document discourages residents and citizens of the USA to invest [it actually reads: By opening an account or accessing the BitGem Website, you agree to the following terms: 4. You must not be a resident or citizen of the United States of America or any territories of the United States of America], but then provides 5 pages dedicated to US tax and IRS information. "Why?", he asks. Finally, he points out the issue of accountability, saying that, "BAM is based in the British Virgin Islands. ... Is it regulated there by the British Virgin Islands Financial Services Commission? (Red flag!) I hardly need to tell you that if it is not regulated (read: legitimate), do not invest!" In short, he worries that as long as organizations like this exist, they will ruin the good name of true and honest diamond investment professionals. Caution is advised.