Cryptocurrency Firms “Fake” Legitimacy: Canadian Financial Watch Dogs

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June 21, 2023 by Aishwarya shashikumar

Canadians are encouraged to double-check cryptocurrency trading service providers since these platforms may be bolstering their legitimacy by using “fictitious” regulatory bodies.

Some “purported” cryptocurrency platforms, in an effort to look respectable, are claiming to be approved by specific regulatory agencies or dispute resolution organisations, according to a June 20 Investor Alert from the Canadian Securities Administrators.

The CSA issued a statement saying that “the websites appear to be credible at first glance, with references to complaint processing, dispute resolution, and providing redress to aggrieved investors.”

According to the CSA, one such website even claimed that its bogus certification makes it a trustworthy and reliable online trading platform, saying,

“But upon closer inspection, the websites’ language can be awkward and unpolished, with errors in spelling, grammar or syntax — a common ‘red flag’ of illegitimate entities.”

The Financial Standard Commission FSC Canada, Financial Commission/Finacom PLC Ltd., and its related business, Blockchain Association are only a few of the “fictitious” regulatory agencies and organisations mentioned by the CSA.

The CSA asserts that none of the organisations listed are “known,” and that any organisation claiming to be a member of any of the organisations is “likely fraudulent.”

A list of cryptocurrency companies that claim to be a part of the “Blockchain Association” was discovered by local media on the website of the group, which the CSA has accused of being a sham.

When this article was published, media representatives had not yet heard back from Etheralabs, Gallant Exchange, SmartDec, StormGain, YouHodler, Finacom PLC Ltd., or Asia Blockchain.

Cointelligence is looking into its listing as a partner, a spokeswoman for the company told local media, and will update when additional information is available.

CSA stated,

“Anyone considering using a crypto firm that claims to be certified or a member of a dispute resolution organization should try to independently verify that the referenced organization actually exists.”

Citizens Warned To Cross Check Cryptocurrency Firms

The agency also suggested that anyone who were thinking about investing in cryptocurrency compare the firms to those that had already registered with the CSA. Currently, 11 crypto trading sites have submitted pre-registration undertakings, and 12 hold business licenses to operate in Canada.

A of certificate of Blockchain Association membership. Source: Gallant Exchange

Even though this isn’t included in the regulator’s statement, it should be highlighted that crypto businesses themselves could fall prey to “fake” certifications, and that just because a certification is listed doesn’t necessarily mean a platform is “fraudulent.”

The full list of organizations and authorities that the CSA has called “fake” includes the following:

Financial Standard Commission FSC CanadaFinancial Commission/Finacom PLC Ltd.Blockchain AssociationEuropean Financial Services and Exchange CommissionCrypto Conduct Authority/Crypto Frugal Ltd. (Ireland)Crypto Conduct Authority/Crypto Frugal Ltd. (U.K.)International Regulatory & Brokerage E-marketsBritish Investment Commission/BIC PLC Ltd.International Financial Market Supervisory AuthorityCrypto Commission Authority/Crypto Commission Ltd.

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