Practically every industry that deals with money suffers from the issue of dishonest individuals trying to take advantage of consumers and scam them of money. The cryptocurrency industry is no exception and its lack of proper regulation in certain jurisdictions makes it even more vulnerable. In response to this, regulators around the globe have put measures in place and issued warnings to the public to help combat the occurrence of cryptocurrency-related scams.
The latest country to do so is Latvia, whose Financial and Capital Market Commission has put out a statement to guide the public against such scams.
Latvia Warns Against Suspicious Activity
The official statement from the commission was published on October 19, 2020, and informed the public that they should “be particularly vigilant, as cryptocurrencies operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets.”
This is not the first time that regulators across the world have expressed concern about the unregulated nature of the market and the risks that come along with this. There are certain investments in Latvia that involve cryptocurrency that require approval from the commission but the industry otherwise operates without much oversight.
As part of the statement, a number of popular tactics used by crypto scammers were identified. These included the use of the names, image, and likeness of popular individuals and companies to garner public trust. After this is done, the victims are redirected to websites where they are asked to submit their phone numbers. The scammers then call them and attempt to convince them to invest money in fraudulent schemes that do not return a profit.
To lend themselves credibility, registration numbers or contact details of legitimate companies are often used. The scammers often peddle worthless stocks, bonds and cryptocurrencies and because the industry is not under the supervision of the commission, consumers do not have any legal protections.
To prevent such situations, the commission advised the public to only carry out their investments through firms that are duly registered and are under the regulation of the government.
“For non-financial services professionals who want to invest, we recommend that you go to a bank or investment brokerage firm that has been licensed or licensed. Such service providers are obliged to inform about possible risks and to provide an offer corresponding to the client’s risk profile,”
the statement says.