Cryptocurrencies: beware of scams

Investment scams have shifted to crypto-assets. A source of growing concern for the Autorité des marchés financiers. The “Revenu” gives you its advice to check if your bitcoin platform is approved in France.

Hacked crypto-asset wallets, exchange platforms unable to return bitcoins or ethers… The list is long of the pitfalls faced by French savers who invest in cryptocurrencies.

The custody obligations of trading platforms are much lower than those of a bank and downright zero if you transfer your assets to a “cold wallet”, in other words to an external wallet disconnected from the Internet like Ledger. And then there are the outright scams.

“The Retraining of Forex Scammers [marché des changes] towards crypto-assets, observed in previous years, is clearly confirmed this year”, reveals Marielle Cohen-Branche, mediator of the Autorité des marchés financiers (AMF) on the occasion of the presentation of her annual report for 2021. She identified forty-four dispute files with service providers of digital assets (PSAN).

Admittedly, this is still a small share of the mediation requests received (nearly 2,000), but it is worrying. And all the more so since the AMF mediator has an extremely limited capacity to intervene. Of the forty-four files concerning crypto-assets, only six fell within its field of competence!

Choose an actor registered by the AMF

“I can only intervene if the digital asset provider is registered with the AMF,” insists Marielle Cohen-Branche. To date, about thirty of them have been registered, including, in order of precedence, Coinhouse, Voyager Europe, Stackinsat, Sheeldmarket, Bitpanda, Bykep, Paymium, Banque Delubac, etc. To properly identify them, the stock market watchdog publishes on its website an exhaustive list of these intermediaries as well as their obligations vis-à-vis savers. This is an essential first protection, because it puts the PSAN in the sights of the AMF and its mediator.

Since the Pacte law organized the registration of digital asset providers with the AMF, the list of these players specializing in the sale and storage of bitcoins and other cryptocurrencies is growing every month.

Registration is mandatory when PSAN wants to provide a transaction or custody service in France and make promotional communications there. When registering, the AMF verifies that they have sufficient human and technical resources, particularly in the context of the fight against money laundering and the financing of terrorism. But if this registration indicates the professional capacities of the PSAN, it does not provide all the necessary guarantees. A closer examination of its organization and its ability to secure assets is necessary.

No start without approval

A new accreditation is also about to be put in place. To obtain it, the PSANs must, among other things, sign agreements with customers, carry out an identity check on the latter, trace their operations, provide clear information and set up a procedure for handling complaints. Only approval allows them, in principle, to carry out commercial procedures with you. If one of these bitcoin providers solicits you without this registration, his case falls under the criminal courts and for his client, everything will be more complicated.

Take care at least to choose a platform considered as French – where it is indicated, for example, an address, a telephone number or a domain name in “.fr” – because it explicitly provides a service.

What to absolutely avoid

it seems obvious that the means of recourse are weak on platforms located abroad in tax havens. But we must also be wary of brokerage platforms which operate in France, within the framework of the freedom to provide services, from branches based in more “lax” European countries, such as Cyprus, the State at the origin of most complaints regarding trading received through the mediation of the AMF.

Marielle Cohen-Branche warns in particular in her annual report against “the perverting of the principle of the freedom to provide services by unscrupulous brokers”. She describes their very aggressive commercial practices “likely to receive criminal qualifications”: manipulation, incitement to declare themselves professional, causing them to lose the protection reserved for retail investors., redirection to subsidiaries located outside Europe without the customer’s knowledge.

Because if in the past the AMF mediator was able to resolve disputes relating to fraud, today she must enjoin the saver to file a complaint before the courts for all scams that fall under criminal law, as soon as there is suspicion of fraud. In 2021, the numerous complaints regarding trading addressed to the mediation of the AMF, but referred to the courts, reported losses of between 169 euros and 337,000 euros. Long procedures, sometimes in the language of the country of origin, and with very uncertain results.

“If you go there yourself, manage!”

The degree of protection you benefit from depends on where the service provider is located, but also on your behaviour. Your action counts: if you voluntarily enter the “shop” (this also applies to online and mobile sites), you are less defensible. This is what the Anglo-Saxons call the “reverse solicitation” for “reverse solicitation”.

Which Marielle Cohen-Branche translates in a few words: “If you go there yourself, manage!” As these notions of requesting and providing services in a country remain rather vague, savers must be attentive to the quality of the sites they choose. The subtlety applies to all investment services providers (ISP).

Beware of Bad Advisors

Many “specialists” deliver advice on social networks pretending to quick wins. Distrust again if the advisor does not have at least the status of PSAN. Any financial investment adviser (CIF) or wealth management adviser (CGP) will have to adopt the status of PSAN to advise you in the rules of the art on bitcoins. And that’s not all.

Be very careful in your bitcoin transactions. During a purchase, the payment does not always arrive at the desired address. It is to be hoped that a more protective and coherent framework will be established by the Mica directive, in preparation in Brussels. But in the meantime, the greatest caution is still required.

Whether it is brokerage on exchange products or crypto-assets, in any case, check the degree of assistance provided (read the comments) and make sure of a certain location in a country with control authorities worthy of the name. Otherwise avoid the site.

Beware of collusion and manipulation on social networks

“You too can make a lot of money by betting on cryptoassets or 2.0 currencies.” Really ? After a first contact made on the Internet during innocuous consultations of dating sites or discussions on social networks, your interlocutor tells you how he made a fortune by betting on cryptocurrencies.

The alluring bait

Management consultant, Erwann, 50, confesses on the AMF website his misadventure: the collusion established, we quickly come to talk about money. His “new friend” then initiates him by letting him take control of his own account. Banco, he opens his. The advisers of the brokerage pharmacy then indicate to him the actions to be carried out via Telegram messaging. He earns 2,000 euros. A tad suspicious, Erwann still calls for his dues. No problem: we make a transfer.

This time, he plays with confidence and returns to the pot. A little later, he recorded a profit of 240,000 euros “in one go”. He is asked to pay 10,000 euros in commission to recover them. He complies, but when he has to pay the Singaporean taxes, he finally smells the confusion and files a complaint. Another case, another method. A saver places 1,000 euros on a “cryptocurrency” buy-sell platform.

In the middle of the night, he receives a call for a great tip: he must invest 10,000 euros without delay, the platform advances him the funds. The next day his “adviser” calls him to congratulate him: he has won 100,000 euros but you have to pay 50,000 euros to receive the sum. Suspicious, he calls the AMF, the rest you know… Only a complaint may allow him to recover his bet.

Where to turn

If in doubt, contact AMF Épargne Info Service on 01 53 45 62 00 or Assurance Banque Épargne Info Service on 34 14.

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