Crypto firms are touting bogus regulatory stamps, Canadian regulator warns

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Canadian citizens are advised to double-check crypto trading service providers, as platforms may use fictitious regulators to boost their credibility.

According to a June 20 investor alert from the Canadian Securities Administrators, some purported crypto platforms claim to be endorsed by dubious regulators or dispute resolution bodies in an effort to appear legitimate.

The websites appear credible on the face of it, with references to complaint handling, dispute resolution and redress for aggrieved investors, the CSA said in a statement.

Investor Alert: Some crypto websites are using fake regulators and dispute resolution bodies to appear legithttps://t.co/Ptqx3RHjfg pic.twitter.com/2QIpwnJdcB

CSA_News (@CSA_News) June 20, 2023 But on closer inspection, website language can be clunky and crude, with spelling, grammar or syntax errors a common red flag of illegitimate entities.

The CSA has labeled 10 entities as fictitious regulatory agencies and organizations, including Financial Standards Commission FSC Canada, Financial Commission/Finacom PLC Ltd. and its associated entity, the Blockchain Association, among others.

In its notice, the regulator said none of the listed entities were known and also suggested that any entity claiming to be a member of the organizations is likely fraudulent.

Blockchain Association says it’s a mistake

However, in a statement to Cointelegraph, Nikolai Isayev, the chief operating officer of the accused Blockchain association, said that they “did not agree” with the contents of the notice and that they “thought the regulator had made a mistake”.

“We have already engaged legal counsel in Canada and prepared a submission to CSA to remove this designation. We expect this issue to be resolved soon.”

A Blockchain Association membership certificate. Source: Gallant Exchange

Isayev noted that the association was created in 2018 to “unite professionals in the blockchain space” and develop best practices for the use of blockchain technology, including dispute resolution for crypto traders.”

“The Association has had a handful of members over the years but has provided no services for the past 2 years and is currently in an inactive state,” he said, adding:

“Based on our experience, it is likely that strangers have cloned or copied our membership certificates to pursue possible fraudulent activity involving online scams, which we are actively working to identify and consistently warn the public about. .”

Cointelegraph has also reached out to crypto firms listed as members and partners of the Blockchain Association for comment.

A purported list of Blockchain Association members with links to their websites. Source: Blockchain Association

In an emailed statement to Cointelegraph, Cointelligence managing partner On Yavin said he was unable to comment on the content of the regulatory notice as they had not worked with or communicated with the entity except for an introduction to Isayev in 2019. .

“In August 2019, Mr. Nikolai Isayev contacted Cointelligence and requested a collaboration to list us as a partner and share our content and educational materials with their audience.”

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Meanwhile, the CSA has warned that “anyone considering using a crypto firm that claims to be certified or a member of a dispute resolution organization should try to independently verify that the referenced organization actually exists.” .

The regulator also advised citizens considering investing in crypto to check companies against those registered with the CSA. There are currently 12 crypto trading platforms licensed to do business in Canada, while 11 have filed pre-registration commitments.

Although the statement from the regulators does not address this, it should be noted that the crypto companies themselves may not be aware of the so-called fake certifications, and the list of certifications does not necessarily mean that a platform -form is fraudulent.

The full list of regulatory agencies and entities that have been accused of being “fake” by the CSA include:

Financial Standard Commission FSC CanadaFinancial Commission/Finacom PLC Ltd.Blockchain AssociationEuropean Financial Services and Exchange CommissionCrypto Conduct Authority/Crypto Frugal Ltd. (Ireland)Crypto Conduct Authority/Crypto Frugal Ltd. (UK)International Regulatory & Brokerage E-marketsBritish Investment Commission/BIC PLC Ltd.International Financial Markets Supervisory AuthorityCrypto Commission Authority/Crypto Commission Ltd.

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Update (June 21, 08:55 UTC): Added response from Cointelligence Managing Partner On Yavin.

Update (June 21, 09:49 UTC): Added response from Blockchain Association COO.

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