In a fresh bid to clamp down on deceptive practices in the digital assets industry, the Canadian Securities Administrators (CSA) issued an alert on June 20th, cautioning investors about cryptocurrency trading platforms that are allegedly using “fictitious” regulatory authorities to enhance their credibility.
The CSA, which regulates Canada’s financial markets, stated that some purported crypto platforms are making claims of approval by specific regulatory or dispute resolution organizations, creating a veneer of legitimacy to ensnare unsuspecting investors.
The cautionary tale reveals that the deceitful platforms appear credible initially, boasting of robust mechanisms for handling complaints, dispute resolution, and offering redress to disgruntled investors. However, an in-depth analysis uncovers awkward language, spelling mistakes, and grammatical errors. The CSA has flagged such inconsistencies as telltale signs of potentially illegitimate operations.
The CSA also listed several ‘fictitious’ regulatory bodies and organizations that these platforms have allegedly used to bolster their credibility.
The list includes entities like the Financial Standard 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. (U.K.), International Regulatory & Brokerage E-markets, British Investment Commission/BIC PLC Ltd., International Financial Market Supervisory Authority, and Crypto Commission Authority/Crypto Commission Ltd.
It strongly suggested that any platform claiming membership or certification from these entities is likely to be fraudulent. In response to this alarming trend, the CSA urged potential users of crypto services to independently verify the authenticity of these platforms before engaging in any transaction.
While Binance, one of the leading crypto exchanges, recently announced its exit from the Canadian market due to new regulatory norms, there are currently 12 crypto trading platforms authorized to conduct business in Canada. An additional 11 platforms have submitted pre-registration commitments.
In its advisory, the CSA pointed out that the listing of a ‘fake’ certification does not necessarily denote the platform as fraudulent. It’s plausible that crypto firms themselves could be victims of these deceptive certifications.