“As part of its responsibility toward safeguarding consumer protection, the MFSA is providing useful and easy-to-read information on cryptocurrency investments,” the watchdog says in the public note they published on their website. In addition to numerous warnings the authority has already issued, it is committed to “further educating the public on how to identify and avoid scams, as well as the actions recommended in the event that one encounters a scheme of a dubious nature within the crypto asset sector,” the public note adds.

The MFSA says that scams are highly likely to be advertised online, with the use of “clickbait titles” to attract unsuspicious investors. The authority adds that some websites will ask for personal details, which can often be followed up by a phone pitch by a “friendly and supposedly expert salesperson whose aim is to convince victims to invest money in their scheme,” the MFSA says.

The authority says that the most common types of cryptocurrency scams include fake initial coin offerings (ICOs) and crowdfunding ventures promising high yields in short term; eventually leading to platforms closing down and operators disappearing in an impromptu manner with the investor’s money. The watchdog also warns about fake exchange platforms and fake crypto wallet applications.

The MFSA has compiled the following 11-item checklist to help investors establish whether a proposed investment scheme can be trusted or not.

• 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”.

“When investing, consumers of financial services are advised to proceed with caution and always make the necessary find-outs about the company,” the watchdog says. MFSA encourages users to check whether the company is regulated, which can be verified in the authority’s online Financial Services Register. When in doubt, consumers are welcome to get in touch with the MFSA via email or through their website.

“Consumers are also urged not to be fooled by the sensation of trust which these illegitimate platforms so often allude to. More importantly, one should take heed of the advice: if it seems too good to be true, it probably is,” the MFSA concludes.

The post MFSA warns against crypto scams, offers guidance first appeared on The Malta Business Weekly.

“Poor regulation enables corruption to flourish,” the Nauticus chief says, directing special attention to Pyramid and Ponzi schemes. “Unregulated exchanges are often hacked or shut down without returning the funds of users,” the chief warns.

Nauticus, however, mentions in its press statement that a handful of countries, including Switzerland, Malta and Australia, have embraced “well-designed regulations” for encouraging innovation while also protecting users.

“Verifying every user helps to fight corruption and criminality, and not only protects the business but protects our users themselves from fraudulent practices,” says Jonathan Chang, Chief Operating Officer of Nauticus, underscoring the gravity of know-your-customer (KYC) protocols.

Melbourne’s Nauticus Exchange is a digital financial marketplace offering 17 currencies and the Australian dollar. Nauticus is registered with the Australian Government’s AUSTRAC as a Digital Currency Exchange and an Independent Remittance Dealer. Headquartered in Melbourne, the company is a registered representative of an Australian Financial Services Licensee enabling it to tokenise assets in the form of security token offerings.

The post Nauticus CEO says good legislation can protect users from scams first appeared on The Malta Business Weekly.

The most common criminal activity last year comprise of theft from cryptocurrency exchanges. Hackers stole more than $950m (€840m+), a 3.6 times growth as compared to 2017, the report finds.

Users and investors also fell for fraudulent ICOs, phoney exchange hacks, and Ponzi schemes in 2018, losing at least $725m (€640m+) in cryptocurrency. “A cryptocurrency exit scam is a confidence game where the promoters of a cryptocurrency ICO or other venture fails to execute — or executives of exchanges say they cannot return users’ assets — and then abscond with the money. This finding indicates that a new breed of cybercriminals is shifting their techniques from hacking to insider jobs,” the press release announcing the report says.

Despite the downturn in the prices of many cryptocurrencies, the total American dollar value of falsified tokens was higher in 2018 than the preceding year. According to the report, this talks of the sophistication of cybercriminals, as well as the increasing need for better online security.

The report also compiles the coming wave of global regulatory enforcement and emerging money laundering schemes “By 2020 most modern economies — including the US, EU and G20 as well as Gibraltar, Bermuda and Malta — will have deployed strict cryptocurrency AML and Know Your Customer (KYC) regulations,” the press statement says. However, the report notes that cryptocurrency laundering activities can bypass these regulations by obscuring the source of funds with new and innovative money mixers, unregulated crypto-to-exchanges, and privacy coins.

“Cryptocurrency criminal activity continues to evolve and accelerate. Fortunately, pending global legislation will hamstring many criminals, global gangs, and terrorist groups by greatly reducing their opportunities to launder,” says Dave Jevans, CEO of CipherTrace and co-chair of the Cryptocurrency Working Group at the APWG.org. “These tough new laws will drive bad actors to not only innovate but also flock to jurisdictions with weak regulatory oversight, as we have shown in earlier research. CipherTrace’s blockchain intelligence and anti-money laundering technology helps exchanges, financial services firms, regulators, and law enforcement work together to create trust in the crypto ecosystem,” he adds.

CipherTrace develops cryptocurrency anti-money laundering, cryptocurrency forensics, and blockchain threat intelligence solutions. Its CipherTrace Cryptocurrency Anti-Money Laundering Report is published quarterly. CipherTrace was founded in 2015 by Silicon Valley entrepreneurs involved in cybersecurity, eCrime, payments, banking, encryption, and virtual currencies. The US Department of Homeland Security Science and Technology (S&T) and DARPA initially funded CipherTrace, and it is backed by leading Silicon Valley venture capital investors.

The post Crypto scams, theft increase in 2018, says AML report first appeared on The Malta Business Weekly.