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Digital asset firms are listing fake regulators to gain credibility with investors, the Canadian Securities Administrators (CSA) has warned.

These virtual asset service providers (VASPs) claim to be certified by a fictitious authority or claim to be members of a purported dispute resolution organization. The fake regulators include the Financial Standard Commission, Blockchain Association, and Crypto Commission Authority.

Some VASPs even include a link to the purported regulators. However, upon close inspection, these websites have unpolished language and spelling, and grammar errors, a common red flag with scams.

“None of the above organizations are known regulators or established dispute resolution organizations, and any entity claiming to be approved by or a member of those organizations is likely fraudulent,” CSA warned.

The umbrella body of Canadian provincial securities regulators urged caution from investors when investing in digital assets. While it listed 10 fake regulators being touted by VASPs, “other fake names with similar intent could appear at any time,” it said.

Investors must independently vet any VASP’s purported licenses and regulatory status.

“Don’t just rely on the organization’s website—check to see if the organization is mentioned in news articles or is referenced by other well-known entities.”

One of the fake regulators called out by the CSA has disputed the accusations, claiming to be a legitimate organization. Blockchain Association says its inclusion in the list was a mistake by the securities body.

“We have already engaged legal counsel in Canada and preparing a submission to CSA to remove this designation. We expect this issue to be resolved soon,” COO Nikolai Isayev told one outlet.

Blockchain Association was founded in 2018 to bring together stakeholders in the digital asset industry, Isayev added. It fosters the development of best practices for the sector, including offering dispute resolution for traders.

Isayev believes it’s possible scammers have cloned the organization’s brand or that some VASPs have copied its membership certificates fraudulently.

Digital asset firms claiming fake licenses and regulatory oversight are not new. Most recently, the U.S. Federal Deposit Insurance Corporation (FDIC) sent a warning to the OKCoin exchange for falsely claiming to be FDIC-insured.

Watch: BSV Provides Solutions for Cybersecurity & Fraud

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