Business 7 December 2018

Ed Drake

‘Unauthorized’ crypto service draws ire of Italian, Maltese regulators

The chief financial regulator in Italy, the Commissione Nazionale per le Società e la Borsa (CONSOB), has issued a cease and desist order to SolutionsCM Ltd. over an alleged breach of Italian securities laws.

The order is the latest example of a regulator taking a tough enforcement line against crypto companies violating laws around providing securities and crypto trading services to the public which fall within the scope of existing securities laws.

The order was issued in connection with the website originalcrypto.com, where the promoters were alleged to be engaged in “the provision of unauthorized investment services and activities to the Italian public.”

The warning was backed in a joint statement by the regulator in Malta, the Malta Financial Services Authority, where originalcrypto.com has previously falsely claimed to have been regulated.

Both the Malta Financial Services Authority and CONSOB warned of the risks of doing business with unregulated and illegal brokers, encouraging investors to consult their respective websites for information of legitimately licensed companies.

Crypto scam monitoring site ScamBitcoin had previously raised questions about Original Crypto, labelling the platform an “illicit investment service” back in February. According to the site, “Portraying their platform as a cryptocurrency financial brokerage, OriginalCrypto.com has engineered a clever marketing approach to promote their illicit investment services to consumers across the world.”

“We could find no evidence to support that [the company] was an actual corporation,” ScamBitcoin pointed out. “Furthermore, the alleged corporate address provided…does not appear to be a factual physical address and computes to a variance of their disclosed address.”

Securities regulators and enforcement agencies have been kept busy in recent months, as efforts to clamp down on cryptocurrency scams intensify. With jurisdictions such as Malta now competing for regulated operators, the impetus to tackle unregulated activity in the sector has never been greater.

Malta has become a hub for crypto businesses since it introduced a new regulatory framework earlier this year. Since then, Malta has gained the nickname “Blockchain Island,” with several of the world’s largest exchanges choosing to headquarter on the island.

The joint statement issued with CONSOB is the latest example of regulators coordinating efforts to tackle the unlawful promotion of cryptocurrency services and ICOs.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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