Malta watchdog warns against fraudulent crypto projects

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The Malta Financial Services Authority (MFSA) has issued a guidance note that seeks to help the citizens steer clear of fraudulent crypto projects. The regulator highlighted the risks associated with investing in cryptos, urging citizens to be vigilant when dealing with this new asset class.

The MFSA reminded the citizens that while the government will strive to stamp out fraud in the crypto industry, they have a duty to protect their investments. It outlined various ways that one can use to identify crypto scams, as well as what to do when one encounters such a scam.

Most fraudulent projects advertise aggressively, usually online, the guidance note revealed. They use clickbait titles that are meant to grab people’s attention. Most of them require one’s personal information including their contact details. Once you submit the details, they immediately contact you, usually posing as experts in the crypto industry. They then convince you to invest your money with them, usually with promises of ludicrous returns.

The note also outlined some of the most common scams that investors should beware of. They include fake initial coin offerings (ICOs) which shut down as soon as they collect people’s money. Crowdfunding ventures that promise higher returns than the market rate should also be treated with caution. The third common type of scam is fake wallets which take one’s money, the note explained.

Furthermore, the guidance note outlined the 11 most common red flags that one must look out for, common with fraudulent crypto projects. They include promises that your funds are 100 percent guaranteed, unrealistically high returns and lack of proper documentation. Absence of local offices, aggressive selling techniques that rush you to invest, evading the tough questions and an evasive website or whitepaper should also be treated with caution.

To avoid falling into the trap, investors should first confirm the legitimacy of a business with the regulator.

The MFSA has been on the frontline in urging crypto investors to avoid crypto scams. The financial services watchdog has had to be on high alert given the popularity of cryptos in the country. Malta, which has become known as the Blockchain Island has put in place many crypto-friendly measures. This has attracted some of the biggest companies in the crypto space including the world’s largest crypto exchange by volume, Binance.