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As an investor, one of the first things you do is due diligence. This involves checking a few things such as approval from regulatory authorities. Deceptive crypto trading providers seem to have caught wind of this and are now creating fake authority websites to dupe unsuspecting customers into thinking they are legit.
The Canadian Securities Administrators (CSA) has issued a warning to investors regarding fake crypto trading service providers. These entities falsely assert that they are authorized or affiliated with regulatory or dispute resolution organizations that do not actually exist.
Unmasking Deception: Fabricated Legitimacy Strategies
In an attempt to deceive, these dubious trading service providers assert certifications from fictitious authorities or membership in non-existent dispute resolution organizations. They go to great lengths to present themselves as a “reliable and trustworthy online trading platform” based on these phony certifications.
Notably, some of these fraudulent trading services’ websites even feature links to counterfeit regulatory or dispute resolution organizations, each with their own seemingly genuine websites.
Identifying Fraudulent Entities
The CSA has identified several fictitious regulatory or dispute resolution organizations, including;
- Financial Standard Commission FSC Canada
- Financial Commission/Finacom PLC Ltd.
- Blockchain Association (U.K. and Hong Kong – https://blockchainassociation.io/)
- European Financial Services and Exchange Commission
- Crypto Conduct Authority/Crypto Frugal Ltd. (Ireland)
- Crypto Conduct Authority/Crypto Frugal Ltd. (U.K.)
- International Regulatory & Brokerage E-markets
- British Investment Commission/BIC PLC Ltd.
- International Financial Market Supervisory Authority
- Crypto Commission Authority/Crypto Commission Ltd.
At a glance, the website looks legit featuring references to complaint processing, dispute resolution, and investor remedies. In fact, even the location checks out to real places such as Canary Wharf in London or Plaza de Mayo in Buenos Aires.
However, upon a closer look, the cracks of illegitimacy begin to show. The websites often have a strange and unpolished language with mistakes in spelling, grammar, or how words are put together. This is a clear sign that the websites are likely run by dishonest people trying to trick you. Any legit website will take its time to refine its language, especially when it comes to regulatory bodies.
Being able to identify crypto investment scams is a must-have skill as it helps you avoid the many pitfalls set out by scammers.
Crucial Information for Investors
It is imperative for investors, particularly those involved in cryptocurrency investments, to be aware of the following:
- The organizations listed above are not recognized as official regulators or established groups that resolve disputes. If any entity claims to be affiliated with or approved by these organizations, they are likely involved in fraudulent activities.
- The list of fake organizations provided by the CSA is not complete, and there could be other made-up names with similar intentions in the future.
- Many national regulatory agencies and self-regulatory organizations in the investment market are associated with the International Organization of Securities Commissions (IOSCO), which is a legitimate organization that includes several CSA members.
- If you are considering a crypto firm that claims to be certified or a member of a dispute resolution organization, it’s important to independently verify the existence of that organization. Don’t rely solely on the firm’s website—check for mentions in news articles or references from reputable sources.
Additional Measures for Crypto Investors:
In addition to the above information, individuals thinking about investing in crypto assets should take the following steps:
- Check the CSA’s (or any other official regulatory authority’s) registered list of crypto trading platforms.
- Make sure you have a good understanding of the basic concepts of crypto assets.
- Educate yourself with the latest and most common crypto scams so as to avoid them should you encounter them.
- Remember that while regulatory oversight helps protect investors, it doesn’t eliminate all the risks associated with trading crypto assets, including significant and sudden price changes.
