Malta Warns Of Crypto Scams & Takes Blockchain Risks Seriously

The Mal­tese finan­cial super­vi­so­ry author­i­ty MFSA warns the pub­lic against a fraud­u­lent online provider called “Bit­coin Rev­o­lu­tion”. In the state­ment from 25 Jan­u­ary on the MFSA web­site, atten­tion is drawn to the ille­gal activ­i­ties of the com­pa­ny.

The pre­vi­ous­ly unknown per­pe­tra­tors adver­tise their project on a vari­ety of domains, most recent­ly on the web­site https://the-bitcoin-revolution.org. In exten­sive adver­tis­ing cam­paigns on social media plat­forms (the press state­ment didn’t spec­i­fy which), the com­pa­ny tries to lure vis­i­tors to its web­site. To do so, Bit­coin Rev­o­lu­tion employs a par­tic­u­lar­ly nasty approach: it adver­tis­es with sup­posed tes­ti­mo­ni­als and claims to have the sup­port of var­i­ous local celebri­ties and stars. In addi­tion, the web­site states that by join­ing Bit­coin Rev­o­lu­tion, these per­son­al­i­ties have made high prof­its in a very short time.

The MFSA dis­tances itself from the com­pa­ny, which claims to be a blockchain com­pa­ny based in Mal­ta and have a legal VFAA licence issued by the MFSA. The MFSA empha­sizes the fact that Bit­coin Rev­o­lu­tion is nei­ther a com­pa­ny estab­lished in Mal­ta nor is it approved or cer­ti­fied in any way by the MFSA.

The state­ment goes on to say that Bit­coin Rev­o­lu­tion seems to be a fraud­u­lent “Get Rich Quick” scam. The com­pa­ny adver­tis­es the pos­si­bil­i­ty of being able to con­vert a deposit made in cryp­tocur­ren­cies into a mul­ti­ple with­in just a few min­utes. There­fore, the pub­lic should not under any cir­cum­stances aim to make any trans­ac­tions or engage in busi­ness activ­i­ties with Bit­coin Rev­o­lu­tion.

Abuse of the recognized “Blockchain Island” brand

Unfor­tu­nate­ly, this case shows that there are always crim­i­nals who want to use scam web­sites to strip some­what naive cryp­tocur­ren­cy fans of their mon­ey. Of course, the exag­ger­at­ed and lurid promis­es made by such com­pa­nies should cause the alarm bells to go off. Few peo­ple let such ludi­crous promis­es tempt them into mak­ing a trans­ac­tion.

Rather, this case is remark­able and sad for anoth­er rea­son. The fraud­sters want to abuse the first-class rep­u­ta­tion of the Blockchain Island Mal­ta as the home of many suc­cess­ful cryp­to- and Blockchain com­pa­nies. The rea­son Bit­coin Rev­o­lu­tion claims to have a valid a VFAA licence is of course to cre­ate trust so that more vis­i­tors fall for the company’s false promis­es.

Determined response by the MFSA

In view of this unfor­tu­nate devel­op­ment, the MFSA’s response has been all the clear­er. With its warn­ing, the super­vi­so­ry author­i­ty clear­ly shows that fraud and ille­gal activ­i­ties on the Blockchain Island will not be tol­er­at­ed under any cir­cum­stances.

For this rea­son, an unmis­tak­able rec­om­men­da­tion is made at the end of the warn­ing:

The MFSA strong­ly advis­es investors and con­sumers of finan­cial ser­vices that pri­or to mak­ing any invest­ment or enter­ing into any finan­cial ser­vices trans­ac­tion they should make sure that the enti­ty with whom the invest­ment or trans­ac­tion is being made is autho­rised to pro­vide such ser­vices by the MFSA or anoth­er finan­cial ser­vices reg­u­la­to­ry author­i­ty as applic­a­ble.”

Cryp­tocur­ren­cies such as Bit­coin and Ethereum as well as Ini­tial Coin Offer­ings expe­ri­enced a real hype at the end of 2017. While blockchain and dig­i­tal assets are a ground­break­ing phe­nom­e­non will trans­form many indus­tries for­ev­er, where there is light, there is also shad­ow. Then, as now, it’s bad play­ers like Bit­coin Rev­o­lu­tion that cause neg­a­tive head­lines and uncer­tain­ty in the scene.

In fact, for too long has there been a legal vac­u­um around cryp­tocur­ren­cies and blockchain tech­nol­o­gy. This is why the Mal­tese gov­ern­ment was the first gov­ern­ment in the world to adopt an offi­cial legal frame­work for DLT tech­nol­o­gy.

The aim of Mal­tese pol­i­tics is pre­cise­ly to put an end to these dark machi­na­tions, legal uncer­tain­ty, and fraud­u­lent prac­tices. It is not about short-term greed for prof­it and exploit­ing a hype. On the con­trary: it is about final­ly paving the way for this ground­break­ing tech­nol­o­gy so that inno­v­a­tive and for­ward-look­ing use cas­es can be researched and imple­ment­ed in a large num­ber of indus­tries. After all, the blockchain offers far more pos­si­bil­i­ties than the pop­u­lar and well-known cryp­tocur­ren­cy exchanges.

This ambi­tious under­tak­ing requires a long-term and trust­wor­thy com­bi­na­tion of leg­isla­tive and offi­cial efforts. The Mal­tese gov­ern­ment is com­mit­ted to a long-term project: posi­tion­ing the sun­ny Mediter­ranean island as Blockchain Island and real­iz­ing the vision of being an inter­na­tion­al hub for inno­va­tion around DLT tech­nol­o­gy. Of course, eco­nom­ic growth and job cre­ation should fol­low suit.

The seri­ous­ness of these efforts can be seen in many dif­fer­ent mea­sures. Mal­tese Prime Min­is­ter Joseph Mus­cat used the atten­tion of the world pub­lic at the UN Gen­er­al Assem­bly to draw atten­tion to the poten­tial of the blockchain. The gov­ern­ment orga­nizes con­fer­ences such as the Mal­ta Blockchain Sum­mit and events with indus­try giants such as Binance. More­over, a sep­a­rate super­vi­so­ry author­i­ty for vir­tu­al finan­cial assets was set up and mea­sures — as this arti­cle proves — are being tak­en, such as harsh con­dem­na­tion and action against those fraud­sters who attempt to destroy these efforts through ille­gal prac­tices.

The clear mes­sage: if all you want is to ”make a quick buck”,  there is no place for you in Mal­ta. If, on the oth­er hand, you are look­ing for a unique envi­ron­ment with a gov­ern­ment con­ducive to inno­va­tion, a com­pe­tent super­vi­so­ry author­i­ty and a clear legal frame­work for your blockchain com­pa­ny, in Mal­ta you will find every­thing you need (and much more).

IMF and Malta discuss risks of blockchain technology

Such a  seri­ous long-term pro­gramme also includes super­vi­sion and feed­back from inter­na­tion­al organ­i­sa­tions. As part of the reg­u­lar dia­logue between the Inter­na­tion­al Mon­e­tary Fund (IMF) and the Mal­tese gov­ern­ment, the IMF also explic­it­ly addressed the pos­si­ble risks of blockchain tech­nol­o­gy. Of course, this had become an issue because the IMF close­ly mon­i­tors the mea­sures tak­en by the Mal­tese gov­ern­ment and its legal frame­work for blockchain tech­nol­o­gy.

Accord­ing to the Times of Mal­ta, the IMF warned that blockchain tech­nol­o­gy would increase the risk of mon­ey laun­der­ing. There­fore, the strictest stan­dards for KYC and AML pro­ce­dures must be adhered to. Fur­ther­more, in view of the large num­ber of com­pa­nies apply­ing for VFA licences and the vari­ety of finan­cial prod­ucts offered by these com­pa­nies, suf­fi­cient staffing of the super­vi­so­ry author­i­ty should be ensured. The IMF sum­marised its con­crete rec­om­men­da­tions in a 50-point plan which was hand­ed over to the Mal­tese rep­re­sen­ta­tives.

Mal­ta is aware of these risks and has long tak­en the nec­es­sary mea­sures to pre­vent mon­ey laun­der­ing and fraud­u­lent prac­tices. In par­tic­u­lar, the author­i­ties take pos­si­ble prob­lems with mon­ey laun­der­ing very seri­ous­ly. The KYC guide­lines are already very strict today and are, of course, rig­or­ous­ly mon­i­tored dur­ing the checks for the issue of a VFA licence.

These con­di­tions and Malta’s com­mit­ment to build­ing an inter­na­tion­al hub for ground­break­ing tech­nolo­gies like Blockchain and Arti­fi­cial Intel­li­gence, Mal­ta is prob­a­bly the most attrac­tive des­ti­na­tion for any blockchain and cryp­to-start­up.

To enjoy the full ben­e­fits of Blockchain Island, you still need a reli­able part­ner in legal mat­ters. A cer­ti­fied VFA agent who com­pe­tent­ly sup­ports you with cryp­to ser­vices. We do this from Dr. Wern­er & Part­ner. Learn more about our Blockchain and Cryp­to-Ser­vices.

About Dr. Jörg Werner

Dr. jur. Jörg Wern­er, born 27 May 1971, attend­ed the law school of the Uni­ver­si­ty of Leipzig and passed his first state exam­i­na­tion in the State of Sax­ony in 1996. After suc­cess­ful­ly com­plet­ing his manda­to­ry legal intern­ship, he suc­cess­ful­ly passed the sec­ond state exam­i­na­tion of the State of Sax­ony-Anhalt in 1998 and was admit­ted to the bar and began to prac­tice as a Ger­man attor­ney (Recht­san­walt) before the court of Magde­burg the same year. He worked as an attor­ney at the Law Offices of Prof. Dr. Fre­und & Kol­le­gen until he formed the firm of Wrede & Wern­er. He was also admit­ted to prac­tice before the Supe­ri­or Court of Naum­burg. In 2001, he moved the firm’s offices to Cen­tral Berlin, where he was admit­ted to prac­tice before the Courts of Berlin. Dr. jur. Jörg Wern­er then com­plet­ed his doc­tor­al stud­ies at the Uni­ver­si­ty of Ham­burg and grad­u­at­ed as a Dok­tor der Rechtswis­senschaften (Doc­tor of Laws).

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