Canadian Regulators Expose Crypto Firms Unduly Luring Investors

Canadian regulators are warning citizens against crypto firms that are using fake registration claims to lure investors

The crypto ecosystem has experienced exponential growth and popularity among investors in recent years. With this surge in interest, numerous crypto-related websites have emerged, providing users with platforms for trading, investing, and exploring the possibilities of this digital realm.

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However, among these platforms, the Canadian Securities Administrators (CSA) has warned that some employ deceptive tactics to appear legitimate by using fake regulatory and dispute resolution organizations.

Tactics Devised by Trading Platforms

In a public statement, the CSA highlighted these crypto trading platforms claim to be certified by fictitious agencies to defraud potential users. By flaunting these bogus certifications, they seek to instill confidence in their services, enticing individuals to trust their platforms with their investments. 

Furthermore, the CSA revealed that these platforms often reference complaint processing, dispute resolution, and the provision of redress to investors, using addresses in real locations. However, a closer examination reveals awkward and unpolished language, riddled with spelling, grammar, and syntax errors. 

Some “fictitious” regulatory bodies and organizations, as listed by the CSA, include Financial Standard Commission FSC Canada, Financial Commission/Finacom PLC Ltd, Blockchain Association, and European Financial Services and Exchange Commission.

The CSA Cautions Investors

The CSA has expressed deep concern over the deceptive tactic of using fake regulatory and dispute resolution entities in the crypto industry. The regulators highlight that this practice poses risks not only to unsuspecting investors but also to the credibility of the entire crypto ecosystem.

Consequently, the CSA strongly advises investors to exercise due diligence and independently verify the existence and legitimacy of any organization that a crypto firm claims to be certified by or affiliated with.

Accordingly, the CSA emphasized that merely relying on the information provided on the organization’s website is not sufficient. Instead, investors should go beyond and conduct thorough research, including checking for mentions of the organization in news articles or references by reputable entities.

Furthermore, the CSA advises individuals to educate themselves on the basics of crypto assets before making any investing decisions.

Crypto Firms Exiting Canadian Territory

In recent times, some crypto firms have chosen to exit the Canadian market due to the country’s increasingly stringent regulatory stance on cryptocurrencies. 

In April, dYdX, a decentralized derivatives exchange announced that it has stopped accepting Canadian users, citing regulatory restrictions. Similarly, Binance has also announced its decision to cease operations in Canada due to regulatory concerns.

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