MFSA publishes 11-point checklist on scam crypto-currency schemes

Malta’s Financial Services Authority has issued an 11 point checklist for consumers to spot crypto-currency and crypto-asset scams.

The checklist includes everything from spotting key words and techniques used by scam artists, like 100% guarantees of fund deposits to the lack of physical offices.

These are outlined below:

  1. Unrealistically high rates of return which are usually higher than the market average;
  2. Easy withdrawals which may be made at ‘anytime’;

3. Promises that any funds deposited are 100% guarantee

4. The business being unregulated;

5. Lack of documentation or the use of documentation which is copied from a legitimate business;

6. Aggressive selling techniques which put pressure and rush you to secure a sale;

7. The absence of physical local offices;

8. Contradiction between documents and spoken information;

9. Not answering and avoiding hard questions;

10. lack of information being provided on the website, or within the whitepaper;

11. the use of buzz words such as ‘no risks’, ‘gains guaranteed’, ‘become a billionaire’, ‘free services just register’.

They stress that the majority of these scams are advertised online utilizing ‘clickbait titles to attract users and make them fall into their trap,’  MFSA says.

They also outline to potential cryptocurrency investors that the most frequent types of scams include schemes like phony ICOs (Initial Coin Offerings), crowd-funding ventures or fake exchange platforms and fake e-wallet apps.

While they look convincing, they have the high probability of stealing investor’s money and quickly shutting down operations.

‘Consumers are also urged not to be fooled by the sensation of trust which these illegitimate platforms so often allude to. More importantly, one should take heed of the advice: if it seems too good to be true, it probably is!’