- The Maltese financial watchdog has cautioned investors against crypto scams
- The MFSA has issued guidelines to safeguard investors from potential frauds
MFSA Warns Investors to Be More Cautious
Frauds and misleading schemes related to digital currencies have been on a steady rise in recent times. Some of the recent examples of this include California police’s vow to make SIM swapping crypto crimes a priority and another eccentric case where a group of hackers has demanded crypto ransom from victims or else they face public humiliation.
Noticing the surge in such crypto-based crimes, the Maltese financial watchdog has issued a number of precautions and guides for cryptocurrency investors to safeguard them from potential fraudulent schemes and make them aware of the risks associated with investing in digital currencies.
The authority’s latest directive aims to educate the masses on how to identify and avoid scams, other than the actions one should undertake should they come across a scheme in the emerging crypto sector offering exorbitant financial returns.
The guidance published by the MFSA notes that such alluring schemes are usually propagated through online mediums and induces victims to fall in the trap by using click-bait titles and promising them exorbitant returns.
The modus operandi of such conmen usually begins with displaying websites that ask for the victim’s personal details. Once the details are furnished, the crooks make a phone call from a friendly and supposedly expert sales person who entices customers to invest more money in their ponzi scheme.
The platforms, according to the MFSA, include:
(a) fake ICOs (Initial Coin Offerings), which can only be used on the platform provided, and whose platforms may eventually be closed and disappear along with the investor’s money
(b) crowdfunding ventures promising higher gains which are availed of once the coin becomes active
(c) fake exchange platforms and fake e-wallet apps
The regulator highlights 11 most common warning signs to identify a fraud scheme. These are:
- Unrealistically high rates of return which are usually higher than the market average;
- Easy withdrawals which may be made at ‘anytime’;
- Promises that any funds deposited are 100% guaranteed;
- The business being unregulated;
- Lack of documentation or the use of documentation which is copied from a legitimate business;
- Aggressive selling techniques which put pressure and rush you to secure a sale;
- The absence of physical local offices;
- Contradiction between documents and spoken information;
- Not answering and avoiding hard questions;
- Lack of information being provided on the website, or within the whitepaper
- The use of buzz words such as ‘no risks’, ‘gains guaranteed’, ‘become a billionaire’, ‘free services just register’