Latvia‘s Financial and Capital Market Commission (FCMC) has identified suspect transactions and attempted fraud in the domestic cryptocurrency space.
On October 19, it has been reported that the FCMC urged investors to “be particularly vigilant, as cryptocurrencies operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets.”
However, within Latvia, the issuance and circulation of cryptocurrencies are mostly unregulated, with exceptions for certain types of investment services and contracts involving crypto that require a license from the FCMC.
The regulator has shared several details of the “signs of fraud” it has identified within the domestic cryptocurrency market.
The FCMC noted that online crypto adverts circulated by scammers may use “names and images of well-known individuals or licensed companies.”
The regulator further said that these ads often direct investors to slick websites where they are asked to provide their phone number. Many of the attempts to persuade investors to “invest” in fraudulent schemes happen over a phone call.
It has been analyzed that scammers may also imitate licensed market participants, appropriating legitimate firms’ registration numbers or contact details to mislead investors.
The FCMC wrote:
“Fictitious companies may offer you investments in bonds, stocks, forex products and cryptocurrencies that are either not traded on exchanges, are worthless, exaggerated, or even non-existent.”
In particular, the regulator emphasized that, in the absence of regulatory supervision, investors are not protected in the case of malpractice.
Thus, the FCMC concluded:
“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.”