The MFSA Issues Guidance on Crypto-Currency Scams

The MFSA has issued a guidance note on the risks associated with investments in crypto-assets with the aim of assisting the general public in identifying and avoiding scams, as well as informing the public on the correct procedure that should be adopted when such scams are encountered.

The MFSA’s guidance note clarifies that such scams are generally advertised online through clickbait titles, or through websites requesting personal details, which would entice individuals with false commercial prospects.

The guidance note also points towards a considerable number of crypto-currency scams, which include:

  1. Fake Initial Coin Offerings, workable only on a suspicious platform;
  2. Crowdfunding ventures with promisingly high gains;
  3. Fake exchange platforms and fake e-wallet applications.

The guidance note lists a number of warning signs, such as:

  1. Unrealistically and unusually high rates of return;
  2. Unregulated business;
  3. Aggressive sales tactics;
  4. The absence of physical local offices;
  5. The use of terms such as ‘no risks’, ’gains guaranteed’, or ‘become a billionaire’, amongst others.

Through its guidance note, the MFSA urges consumers to proceed cautiously, whilst performing the necessary research, and ensuring that the company is regulated.

For more information on virtual financial assets and VFA services regulation in Malta please contact our financial services team on jean.farrugia@dfadvocates.com


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