The Malta Financial and Services Authority (MFSA) has issued a public guidance note to educate the public about cryptocurrency-related scams.
The note describes the way such scams are being advertised (usually using click baits) and provides examples of the most common frauds consumers are likely to encounter online, including:
- fraudulent ICOs (Initial Coin Offerings): these refer to the launch of fake ICOs. The scammer would typically demand money from investors to buy tokens that can only be used on a specific website, which may eventually be taken down without refunding the investors’ money;
- unrealistic crowdfunding ventures: aimed at luring investors with the promise of higher profits than the market average, availed of once the coin becomes active;
- fake websites: typically involving fake exchange platforms and e-wallet apps
The note also lists 10 warning signs of a fraudulent activity:
1) higher than average rates of return
2) advertising campaigns emphasizing that funds can be withdrawn anytime
3) 100% guarantee on deposits
4) unregulated business
5) lack of documentation or use of documentation plagiarized from a legitimate business
6) aggressive sales techniques pushing the buyer to act quickly in order to secure the offer
7) the company launching the ICO would have no physical office
8) contradictions between written and spoken information
9) data missing from the corporate website or the documentation provided
10) use of bait words such as “no risks” and "gain guaranteed"
When in doubt, the MFSA urges the public to refer to the Financial Services Register available at https://www.mfsa.com.mt/financial-services-register/.