German Financial Watchdog Warns Public About Unauthorized Crypto Offering

The German Federal Financial Supervisory Authority (BaFin) issued a warning Nov. 29 that a firm called Platin Genesis DCC is not authorized or approved by the proper authorities.

In the warning, BaFin states that Platin Genesis was advertising a “Platinum Coin Crypto Fund” on social media, which it claimed was “approved and released by BaFin.” The watchdog clarifies in its statement that this is not true.

Per BaFin, the firm does not have permission under section 34 of the German Banking Act to conduct banking activities or offer financial services. The firm is not under BaFin’s supervision.

The firm’s token “Platincoin” is listed on CoinMarketCap, and is trading at $4.48, down 1.11 percent on its daily chart at press time.

Earlier this month, BaFin ordered a partial cessation of activities of U.K.-based crypto-related firm Finatex Ltd. The firm was ordered to “immediately” put a halt to cross-border proprietary trading on its trading platform, Crypto-Capitals.

Finatex purportedly offered “options, contracts for difference (CFDs) on shares, indices, currencies and commodities,” without authorization by the German Banking Act.  

BaFin has maintained a hawkish stance toward ICOs, and has called for international regulations in the sector. Last month, BaFin chairman Felix Hufeld said that “the number (of ICOs) and the volume (of money) per ICO are both getting higher. Investors have mostly minimal rights.”

Referencing ICOs, Hufeld recommend private investors to “keep away from such things” adding that discussions on ICO regulations were underway in “multiple international forums.”

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Nigeria’s Union Bank Reportedly Warns Against Crypto Transactions

The Union Bank of Nigeria has reportedly cautioned against transactions in cryptocurrencies, according to a letter allegedly sent to its users and published Nov. 26 by Nairaland, an online community targeted at Nigerians.

Nairaland, the largest Nigerian online community with over 55 million Internet users, has published a letter reportedly from the Union Bank, which cited the Central Bank of Nigeria “advising that cryptocurrency is not a legal tender in Nigeria and has cautioned against transacting in them.” It also states:

“In order to guarantee the security of our customers’ funds, Union Bank will monitor accounts being used for cryptocurrency transactions and may impose restrictions including closure of such accounts.”

The Union Bank of Nigeria is commercially run, with its assets totaling $4.1 billion as of 2018. As of press time, the bank did not respond to a request for confirmation about the authenticity of the letter.

Back in this spring, the Nigeria Deposit Insurance Corporation (NDIC), a Nigerian financial agency, had already warned its citizens against cryptocurrencies, as “various government agencies in Nigeria have cautioned citizens on the new form of money,” including the CBN, as Cointelegraph reported Mar. 24

Meanwhile, last week, the presidential candidate of Nigeria’s leading opposition party, the Peoples Democratic Party (PDP), Atiku Abubakar promised “to speed up the economy positively through blockchain and cryptocurrency,” Cointelegraph wrote Nov. 25.

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Binance Warns Iranian Traders to Withdraw Crypto Amid Sanctions

Binance is advising its remaining users in Iran to withdraw their money as the cryptocurrency exchange seeks to comply with international sanctions.

“If you have an account with Binance and fall into that [sanctions] category, please withdraw your assets from Binance as soon as possible,” reads an email received in recent days by Iranian users, according to several local sources.

Sepehr Mohamadi, chairman of the board of the Blockchain Association of Iran, said emails like this have been trickling in for months, but their numbers recently increased following renewed U.S. sanctions, which activated on November 5.

At first, Malta-based Binance, which declined to comment for this article, was mainly shuttering accounts of users who provided Iranian passports as part of the know-your-customer (KYC) process, according to sources in Iran. But this week it also began warning accounts connected to Iranian IP addresses to get their crypto out, several Iranian traders said.

“Iranians are not really able to trust cryptocurrency exchanges,” Nima Dehqan, a researcher at the Tehran-based blockchain project Areatak, told CoinDesk. “That isn’t really something new.”

Indeed, BitMex and Bittrex are just a few of the many exchanges that banned Iranian users over the past year, sometimes without refunding the crypto they held for these customers.

“It would be difficult [for the exchanges] to serve users in these jurisdictions if they want to serve American citizens,” John Collins, a partner at the FS Vector consulting firm in Washington, D.C., and former head of policy at Coinbase, told CoinDesk. “It’s logical to say that many companies are looking to the States right now and adapting to the U.S. regulation.”

As such, Dehqan said this has forced the Iranian bitcoin community to band together to create local businesses and support networks.

“We do actually have cryptocurrency groups in Telegram or WhatsApp for people who want to change their cryptocurrencies in person,” Dehqan said. “People have to trust each other. It’s a bit of closer-knit community in Iran.”

Some vendors have even set up physical shops and conduct traditional KYC, just in case Iranian authorities ask about their activities.

Stepping back, U.S. regulatory crackdowns against trading platforms such as EtherDelta have inspired some exchanges that serve American customers to start being more cautious about KYC requirements. And, according to SimilarWeb, roughly 13 percent of Binance’s website traffic comes from the U.S.

“Regulators are starting to focus more on exchanges,” said attorney Nelson Rosario, who specializes in legal issues related to cryptocurrency at the Chicago-based firm Smolinski Rosario Law. Regarding Binance’s moves to de-risk, he added:

“This is an example of how operating a business that deals with people all around the world can be extremely complex and it is nearly impossible to identify all the potential pitfalls in advance.”

However, Rosario noted, Binance doesn’t have any operations in the U.S. and regulators have been paying the most attention to local companies.

Mining for themselves

Binance is cutting ties with Iranian customers at a time when Iranian authorities are reportedly moving forward with plans for a national cryptocurrency akin to Venezuela’s petro.

Mahmoud Eskandari, a Binance user and blockchain developer in Tehran, told CoinDesk he worries the government wants to “completely dominate the economic crisis” by controlling the crypto market.

Such concerns are driving many Iranian crypto fans to establish small mining operations, rather than rely on external platforms.

The narrowing range of exchange options has not dampened crypto fever among Iranians, however.

Dehqan said the Binance news isn’t having a dramatic impact on Tehran’s bitcoin community because more Iranians mine cryptocurrency or hodl their assets, to hedge against inflation, than engage in speculative trading. He added:

“The sanctions don’t have much effect on mining bitcoin. It’s actually profitable in Iran, compared to other countries.”

Over the past year, Dehqan said Areatak has received inquiries for more than 1,000 colocation mining contracts, setting up the infrastructure and charging miners a percentage of their earnings, because electricity is so cheap.

Dehqan estimated cryptocurrency mining in Iran requires a quarter of the electricity costs, less than a single cent per kilowatt hour, than mining in most industrialized countries.

“Many people from other cities come to Tehran to buy mining devices,” said Eskandari, who also mines both bitcoin and ethereum. “My friend sells Antminers and mining devices in Tehran. He sold about 100 devices in the past month.”

According to Iranian news reports, local regulators are also hammering out a legal system for tallying this burgeoning mining industry.

“We have a lot of investors that have visited Iran since the World Mining Summit,” Dehqan said. “All and all, you can actually access buying cryptocurrency in Iran and that’s the only thing that matters.”

Anna Baydakova contributed reporting.

Iran image via Shutterstock

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New Report Warns Over ‘Bad’ Government Cryptocurrency Regulation


U.K. businesses and analysts have hit back at government plans to regulate cryptocurrencies and related technology, describing them as a “blunt instrument approach,” British daily news outlet the Telegraph reported Monday, Oct. 29.

Calls to step up the level of power the country’s finance regulator, the Financial Conduct Authority (FCA), has over cryptocurrency — which Cointelegraph reported on in September — allegedly focus on consumer protection and anti-money laundering (AML) policy.

Now, a joint report from the British Business Federation Authority (BBFA), venture capital fund Novum Insights, and cryptocurrency exchange TodaQ has urged caution about overly far-reaching regulation.

According to the document seen by the Telegraph, “bad regulation is worse than no regulation at all,” with the implication of knock-on effects for the wider U.K. fintech scene.

“It is a very blunt instrument approach and I haven’t seen this in other countries,” BBFA chief executive Patrick Curry told the publication, adding:

“The use of this technology is still a voyage of discovery and these technologies are being refined for different types of use. My concern is the law of unintended consequences.”

The Telegraph reports that the U.K. has so far been slow to get to grips with its domestic cryptocurrency ecosystem, despite London being home to some of the industry’s well-known names such as trading platform eToro and exchange Bitstamp.

In March, the FCA initiated a cryptocurrency “task force,” the premise of which was to assess “what to do about” the phenomenon, FCA chairman John Griffith-Jones said at the time.

Cryptocurrencies, he added, had “the potential of causing consumer harm unless brought within the regulatory perimeter.”

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Thai SEC Warns Public About Investing in Nine Unregistered Tokens and ICOs

The Thai Securities and Exchange Commission (SEC) has issued a warning about investing in nine digital tokens and Initial Coin Offerings (ICOs), which have not been accredited by the regulator, news outlet Bangkok Post reported Oct. 26.

The SEC reportedly initiated an investigation into digital tokens and ICOs being promoted on social media platforms for investment, and found nine cases wherein promoted digital assets had not been authorized by the market regulator.

Per the SEC, the alleged digital assets and ICOs have neither filed an application for the SEC’s approval, nor have they met the necessary qualifications and had smart contracts assessed by ICO portals. The SEC said that those who have invested in the alleged assets should be wary of associated investment risks.

The SEC reportedly reiterated a warning about Ponzi schemes that persuade people to invest in digital assets by promising investment returns generated from tokens. “Information disclosure for investment decision-making is also inadequate, while these digital assets might not have sufficient liquidity to trade and cannot be converted into cash,” the regulator added.

In August, the SEC said that almost 50 ICO projects expressed interest in becoming certified following the Finance Ministry’s announcement to introduce ICO regulations. The authorization process takes up to five months as upon submission of an application, the SEC will transfer the document to the Finance Ministry within 90 days. After that, the Ministry has 60 days to make a decision whether to approve a license.

Later that month, the SEC approved seven businesses to conduct cryptocurrency operations as part of the formalization of the country’s domestic market. The move forms part of a package of “transitional” rules governing crypto businesses operating in Thailand prior to the first tranche of regulations that came into force May 14.

The 100-section law defines cryptocurrencies as “digital assets and digital tokens,” and brought them under the regulatory jurisdiction of the SEC. Thai Finance Minister Apisak Tantivorawong reportedly assured that the new measures are not intended to prohibit cryptocurrencies or ICOs.

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Malta’s Financial Watchdog Warns Against ‘Dubious’ Crypto Trading Platform

Malta’s Financial Services Authority (MFSA) has warned of a “dubious” online crypto trading platform it says has falsely claimed to be licensed in the country, English-language newspaper Malta Today reports Oct. 25.

The platform in question, “Primetradingbot,” reportedly appears to be running a “high yield” Bitcoin (BTC)-related investment scheme, which the MSFA cautions has “a dubious nature with a high risk of loss of money”.

The MSFA has warned that Primetradingbot is not, as it claims, licensed by the watchdog, stating that “although this entity purports to operate from an address in Malta, the MFSA does not believe this to be the case,” adding:

“The MFSA wishes to alert the public, in Malta and abroad, that Primetradingbot is not licenced or otherwise authorised by the MFSA to provide any investment or other financial services which are required to be licenced or otherwise authorised under Maltese law.”

A list of entities that are legitimately authorized by the watchdog is available from the MFSA and can be viewed on the official website of the MFSA here. The MFSA has cautioned the public not to engage in any business or transactions with the suspect firm.

Dubbed the “Blockchain Island,” Malta is widely recognized as having a proactive and transparent crypto regulatory climate, drawing multiple high-profile crypto firms in to relocate there.

Under Malta’s Virtual Financial Assets Act (VFA), which was passed in July 2018, all practitioners — including lawyers, accountants, and auditors — who wish to liaise between crypto vendors and the MFSA have been required to undergo mandatory “continuous professional education” and to take an exam to receive a crypto agent qualification. As recently reported, 39 percent of those sitting the exam this fall attained a pass, despite examiners’ last minute attempts to ease the marking scheme.

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South Korea’s Financial Watchdog Warns Investors Over Crypto Funds

South Korea’s Financial Services Commission has warned the public to exercise caution when investing in cryptocurrency funds.

The FSC issued a note to investors Wednesday, saying cryptocurrency funds have a structure similar to mutual funds and, thus, investors may mistakenly believe such funds are legal investments under the country’s Capital Markets Act.

As per the law, funds that raise capital from the public must be approved by and registered with the FSC. However, cryptocurrency funds are neither approved nor registered, the regulator says.

“Therefore, cryptocurrency funds are subject to Capital Markets Act violation,” the FSC writes.

The commission further indicates that it plans to take measures regarding crypto funds, after consulting with the relevant authorities, to protect investors from any financial harm.

The note comes after a recent review of crypto funds by South Korean financial regulators that took place last week, as reported by CoinDesk Korea.

As part of the review, the FSC is also reportedly scrutinizing a crypto fund issued by an exchange called Zeniex. Based on the note to investors, the FSC could ultimately hand over the Zeniex case to prosecutors.

The news comes as the Korean regulator is becoming increasingly involved in the cryptocurrency and blockchain space.

In July, the FSC announced that it is setting up a new department dedicated primarily to cryptocurrencies and blockchain – called the Financial Innovation Bureau – to focus on developing policy-making initiatives for the domestic blockchain and fintech industry.

The commission is also reportedly mulling whether to allow initial coin offerings in the country after they were banned last year. A government position could be announced as soon as next month.

Korean won and bitcoin image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Brazil Tops List of Cryptojacking Coinhive Victims, Iranian Cybersecurity Authority Warns

The highest number of recorded incidents of Coinhive cryptojacking software have taken place in Brazil, Iran’s country’s cybersecurity authority revealed in a report Monday, October 8.

According to the Iranian authority’s report on malware in 2017, Brazil, the country with the most reported cases, has been hit over 81,000 times by Coinhive. India came in second with around 29,000, followed by Indonesia with more than 23,000, while Iran scored about 11,000.

Coinhive, the cryptocurrency mining software which mines Monero (XMR), provides an Application Programming Interface (API) to developers, which then lets the developer use a website visitors’ CPU resources to mine the privacy-centered altcoin.

According to a study in May, around 300 websites worldwide contained malicious code which would lead to a device becoming infected with Coinhive without users’ knowledge. More recently, the software has been removed from League of Legends Philippines, and police in Japan investigated a cryptojacking case with Coinhive used as malware.

Relating to Iran specifically, CERTCC found the capital Tehran to be most contaminated with 606 reports, followed by Esfahan with 244.

“It is expected to be one of the security challenges in years to come,” the report’s authors forecast.

As Cointelegraph has reported, overall cryptojacking malware reports surged almost 500 percent in 2018. According to calculations in June, around 5 percent of the total circulating Monero supply was mined using such illicit techniques.

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China’s Central Bank Warns Investors of ICO, Crypto Risks

China’s central bank, the People’s Bank of China (PBoC), has today, September 18, issued a new public notice “reminding” investors of the risks associated with Initial Coin Offerings (ICOs) and crypto trading.

The notice, released from the bank’s headquarters in Shanghai, reiterates the severe line that has been adopted by the country’s Office for Special Remediation of Internet Financial Risks, which first introduced a blanket ban on ICOs in September 2017.

Today’s notice censures the “unauthorized” and “illegal” ICO financing model for posing a “serious disruption” to the “economic, financial and social order”:

“[ICOs are] suspected of illegally selling tokens, illegally issuing securities, illegal criminal activities, financial fraud, pyramid schemes and other illegal and criminal activities.”

The PBoC has today hailed the successes of the country’s stringent restrictions that have targeted ICOs and a broad spectrum of crypto-related activities to date, claiming that:

“[T]he global share of domestic virtual currency transactions has dropped from the initial 90% to less than 5%, effectively avoiding the virtual currency bubble caused by skyrocketing global virtual currency prices in the second half of last year in China’s financial market. The impact has been highly recognized by the community.”

Nonetheless, the bank recognizes that several challenges remain, notably the prevalence of offshore exchanges that are used by investors to circumvent the mainland ban.

The PBoC notes that the Office for Special Remediation of Internet Financial Risks has now adopted a series of targeted measures, including blocking up to 124 IP address suspected of providing a gateway to domestic crypto traders.  

It further points to redoubled efforts to “clean-up” payment channels and strengthen monitoring and inspection mechanisms, noting that around 3,000 accounts have already been closed as a result of increased oversight. Lastly the notice outlines recent measures undertaken to counter the circulation of crypto “hype” materials.

As previously reported, on August 25 the PBoC had already issued a fresh risk alert against “illegal” ICOs, warning that blockchain and the idea of “financial innovation” are being used to lure investors as a “gimmick” that conceals essentially fraudulent Ponzi schemes.

This summer has seen an onslaught of toughened anti-crypto measures from Beijing, which have included a ban on commercial venues from hosting crypto-related events in certain districts.

Alongside ‘offline’ measures, China’s tech titans – Chinese ‘Google’ Baidu, Alipay’s Alibaba and WeChat-developer Tencent – have all tightened their monitoring and acted to ban accounts suspected of engaging in or propagating crypto and even blockchain related activities.

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UK Watchdog Warns of Crypto Scams Using ‘Prestigious’ London Addresses as Smokescreen

The U.K.’s Financial Conduct Authority (FCA) has said that crypto investment scams are increasingly targeting British investors, in an official warning published August 17.

The watchdog warns that fraudsters often use celebrity images, slick websites or “prestigious” City of London addresses as a smokescreen through which to lure prospective investors. It adds:

“Scam firms can manipulate software to distort prices and investment returns. They may scam people into buying non-existent cryptocurrencies. They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred.”

The FCA notes that cryptocurrencies themselves are not currently regulated by the agency, meaning that many crypto exchanges and other brokers fall beyond its remit. The agency does however regulate crypto derivatives — including futures, contracts for difference (CFDs), and options.

In these cases, the FCA advises investors to check whether the firm in question has received the required authorization to sell or advertise these products, or to go through its ScamSmart warning list of firms to avoid.

This month, the agency has already issued two warnings over so-called crypto “clone firms” falsely claiming to have FCA authorization.

The FCA further advises that anyone who has already invested in а scam is likely to be a target for a “follow-up.” This “may be completely separate or [otherwise] related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.”

Just last week, U.K. police issued their own warning to the British public over fraudulent crypto investment schemes, after statistics from the Action Fraud national reporting center showed that U.K. victims reported crypto-scam related losses of $2.5 million in June and July 2018 alone.

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