As investors go cuckoo for cryptocurrencies, the chairman of the US Securities and Exchange Commission is warning of the dangers associated with investing in virtual currencies such as Bitcoin, Ethereum and Litecoin.

SEC Chairman Jay Clayton said Monday that cyrptocurrency and initial coin offerings (ICOs) hold substantially less investor protection than traditional securities markets, creating an environment ripe for scams and market manipulation.

He urged investors to weigh those risks before making an investment.

"As with any other type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost," Clayton said in a lengthy statement.

Clayton's comments come amid a historic rise in the valuation of bitcoin, thanks to growing interest with currency traders.

Bitcoin traded as high as $17,370 per coin on Monday before settling back to $16,718 as of this writing, an increase of more than 1,600 percent since the beginning of the year.

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