Canadian citizens are advised to double-check crypto trading service providers, as platforms may use “fictitious” regulators to bolster their credibility.
According to a June 20 investor alert from the Canadian Securities Administrators, some “purported” crypto platforms claim to be approved by certain regulatory authorities or dispute resolution bodies in “an effort to appear legitimate.”
“The websites appear credible on their face, with references to complaint handling, dispute resolution and redress for aggrieved investors,” the CSA said in a statement.
Investor Alert: Some Crypto Websites Use Fake Regulators and Dispute Resolution Bodies to Appear Legithttps://t.co/Ptqx3RHjfg pic.twitter.com/2QIpwnJdcB
— CSA_News (@CSA_News) June 20, 2023
One such website even claimed that its “fictitious certification makes it ‘a reliable and trustworthy online trading platform,'” according to the CSA, adding:
“But on closer inspection, website language can be clunky and crude, with spelling, grammar or syntax errors – a common ‘red flag’ of illegitimate entities.”
Some “fictitious” regulators and organizations listed by the CSA include the Financial Standards Commission FSC Canada, the Financial Commission/Finacom PLC Ltd., and its associated entity, the Blockchain Association.
The CSA claims that none of the entities listed are “known”, while also suggesting that any entity claiming to be a member of the organizations is “likely fraudulent”.
Cointelegraph found on its website a list of crypto firms presented as members of the “Blockchain Association” – the entity is one of the dispute resolution organizations that the CSA has accused of being illegitimate.
Cointelegraph has contacted Etheralabs, Gallant Exchange, SmartDec, StormGain, YouHodler and Finacom PLC Ltd., Cointelligence and Asia Blockchain for comment, but has not received a response at press time.
“Anyone considering using a crypto company that claims to be certified or a member of a dispute resolution body should try to independently verify that the listed body actually exists,” CSA said in a statement.
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The regulator also advised citizens considering investing in crypto to check companies against those registered with the CSA. There are currently 12 crypto trading platforms licensed to do business in Canada, while 11 have filed pre-registration commitments.
Although the regulator’s statement does not address this, it should be noted that crypto firms themselves can fall victim to “fake” certifications, and the list of certifications does not necessarily mean that a platform is ” fraudulent”.
The full list of regulatory agencies and entities that have been accused of being “fake” by the CSA include:
- Financial Standards Commission FSC Canada
- Financial Commission/Finacom PLC Ltd.
- Blockchain Association
- European Financial Services and Exchange Commission
- Crypto Conduct Authority/Crypto Frugal Ltd. (Ireland)
- Crypto Conduct Authority/Crypto Frugal Ltd. (United Kingdom)
- International electronic regulatory and brokerage markets
- UK Investment Commission/BIC PLC Ltd.
- International Financial Markets Supervisory Authority
- Crypto Commission Authority/Crypto Commission Ltd.
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