MFSA Warns Investors against Crypto Scams, Issues Guide to Identify Them


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Following the numerous warnings previously issued in 2019, the Malta Financial Services Authority (MFSA) released an easy-to-read guide addressing the risks associated with cryptocurrency investments and warning the public against crypto-asset scams, media house Times of Malta reported on April 25, 2019.

Don’t Fall for Clickbait and Unrealistic Returns

While the number of ICOs being executed have narrowed subsequently with the advent of safer and more reliable ways of fundraising, such as STOs and IEOs, the threat of crypto-related scams still haunts the industry and its participants.

According to the report, the guide touches on the fact that these scams are mostly advertised online with the use of clickbaity titles to lure in investors. Of all, the three most common cryptocurrency scams that MFSA warned crypto investors about included fake initial coin offerings, crowdfunding ventures promising fanciful returns, and fake exchange platforms and e-wallet apps.

The report also outlined 11 signs to look for to identify potential cryptocurrency scams. These included return rates unrealistically higher than the market average, unregulated businesses, a total lack of documentation or rampant plagiarism, absence of physical offices, use of buzz words such as “no risks,” “gains guaranteed,” “free service just register,” and similar guarantees.

The guide also suggested investors scrutinize the company and confirm whether it is regulated and verify its claims through the Financial Services Register.

Malta’s Unwavering Efforts to Boost Blockchain and Crypto

In the recent past, many countries have passed supportive laws for the crypto sphere while many are still skeptical of the new economy. Malta, however, has empowered the whole industry like few others and has been rightfully tagged as the blockchain island.

On April 3, 2019, BTCManager reported that Malta has approved its first 14 crypto asset agents after almost five months from the formation of Virtual Financial Assets Act. Almost 250 auditors filed for the license after the applications began, but almost two-thirds of them failed to qualify with 28 approved and only 14 making it through the final cut.

MFSA has also assigned CipherTrace, a blockchain security firm, to keep a watch over the activity of crypto businesses functioning across Malta. The firm has also been handed the authority to moderate the regulatory processes and audit risk management of virtual asset businesses in Malta.

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