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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.

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