The Canadian Securities Administrators are ringing the warning bell.
The crypto investing landscape is currently fraught with deception, as unverified and possibly fake trading platforms are leveraging "fabricated" endorsements from regulatory institutions to foster legitimacy, warns the Canadian regulator.
Thus, Canadian consumers that invest in cryptocurrencies are now urged to be more vigilant about the trading service providers they opt for.
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This alarming revelation was made in an Investor Alert issued by the Canadian Securities Administrators on June 20th. In the warning, the Canadian regulator noted:
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 warning highlighted that several "alleged" cryptocurrency platforms are faking approvals from regulatory authorities or dispute resolution entities. This strategy serves to bolster their perceived authenticity.
One such platform, as cited by the CSA, claims that its "fabricated" endorsement certifies it as "a reliable and trustable online trading platform." However, CSA warned that a closer look could reveal language inconsistencies such as syntax errors, spelling mistakes, or awkward phrasing. These are often indicative signs of illegitimate organizations.
The websites appear to be credible at first glance, with references to complaint processing, dispute resolution and providing redress to aggrieved investors.
The CSA listed several "fabricated" regulatory bodies and organizations, including the Financial Standard Commission FSC Canada, Financial Commission/Finacom PLC Ltd., the Blockchain Association, and others.
The watchdog clarified that none of the mentioned entities are recognized, thus implying that any firm claiming membership with these organizations was probably a scam.
The regulatory body further advised potential crypto investors to cross-check the legitimacy of these firms against those registered with the CSA. Currently, 12 cryptocurrency trading platforms are authorized to operate in Canada, and 11 others have lodged pre-registration applications.
The crypto industry is not immune to fraudulent practices. Investors must exercise utmost caution and conduct rigorous due diligence before deciding on a trading platform.
However, while the CSA is ringing the alert bell, several crypto exchanges, including Binance, OKX, and Bybit, have left the country, citing regulatory issues.
