Diane Abbott expresses concern over Bitcoin ‘gigantic Ponzi scheme’

Diane Abbott MP - Image credit: PA Images

Labour is concerned about terrorists and criminals using cryptocurrencies to fund their illicit activities and duck the law, Diane Abbott has said.

Fears have emerged that Bitcoin and other digital currencies could become the capital of choice for jihadist groups, money launderers and other offenders keen to stay below the radar.

Drugs, weapons and child pornography are all said to be available in exchange for crypto cash using the dark web.

Meanwhile, the WannaCry ransomware attack that hit the NHS last May offered to free machines for a fee paid in Bitcoin.

In an interview with The House magazine, the shadow home secretary revealed that Labour was looking into the movement of funds using Bitcoin and their possible links to criminality.

She said: “One of the problems with Bitcoin is the extent to which it is just a gigantic Ponzi scheme... If everyone took their Bitcoin money and tried to buy a new car all at once the whole thing would collapse.”

She continued: “But we are certainly worried about how in the here and now it is being used to fund terrorist activity and that is something we are looking at.”

Abbott said Labour would impose regulations on digital currencies in the way that Jeremy Corbyn vowed to curb the power of financial services last month.

“Labour overall thinks it’s important to have proper regulation of financial services,” she said.

“It was poor regulation of financial services which led to the 2008 crash and obviously regulating Bitcoin would be part of that.”

The UK Government has announced its own plans to crack down on Bitcoin by forcing trading exchanges to disclose the identities of their users and report suspicious activity.

A Treasury spokesman said last year: “We intend to update regulation to bring virtual currency exchange platforms into anti-money-laundering and counter-terrorist-financing regulation.”