$22mln lost in crypto scams in 2021

These scams cover different kind of criminal aspects such as ponzi schemes and false representation etc

  
Representations of cryptocurrencies including Bitcoin, Dash, Ethereum, Ripple and Litecoin are seen in this illustration picture taken June 2, 2021.

Representations of cryptocurrencies including Bitcoin, Dash, Ethereum, Ripple and Litecoin are seen in this illustration picture taken June 2, 2021.

REUTERS/Florence Lo/Illustration
 
There have been a few hundred cases of crypto scams where people in Dubai have lost Dh80 million in 2021 and cases have been transferred to courts, said Tarek Mohammed, Head of Digital Assets Crime Section at Dubai Police GHQ.

He said these scams cover different kind of criminal aspects such as ponzi schemes and false representation etc.

“When we tell these number to people, they say is it really possible that Dh80 million was lost in 2021. We need to safeguard ourselves...

So always, always, always do due diligence with whom you deal with and work with. This is very important. There are great public resources on the Ministry of Economy website where you can have such information,” said Mohammed.

While speaking at a virtual sessions on “Mistakes to avoid when investing in crypto assets”, he said Dubai Police is not reactive but rather proactive.

Digital Assets Crime Section has been created this year by Duabi Police as a proactive approach due to rising crime happening around crypto matters. And a webinar was organized as part of this public awareness initiative.

Dubai Police currently uses anti-money laundering laws issued in 2018 to deal with such virtual assets scams. In addition, there are also Financial Action Task Force (FATF) guidelines to deal with such issues, he added.

How to safeguard yourself

Mohammed said there are some laws coming in very soon that will give clear guidelines on this sector.

He said independent free zones such as Abu Dhabi Global Markets and DMCC etc. have come up with certain preliminary guides that allow regulations for certain companies to operate. But companies outside such free zones are not regulated to conduct these virtual asset business.

“A lot of companies unfortunately get licence as a payment service provider or as a commercial broker from legal perspective. But that doesn’t allow them to trade in crypto currencies... We have unfortunately seen the cases where people said they saw this company is licensed. But in the end it’s not,” he said, adding that a lot of companies or individuals operate overseas. Hence, it becomes a challenge to pursue such cases because the company is licensed in the third country – outside the UAE’s jurisdiction.

“It takes time for us to proceed against these cases.”

Due diligence

Mohammed strongly advised investors in the UAE to do due diligence before making any decisions.

“There is no harm in asking companies and people to provide them a copy of trade license because it’s a public information and not confidential. Also make sure the license is not photoshopped because there have been some cases of documents being photoshopped,” he said.

He warned that there are wonderful stories of people becoming millionaires by investing in cryptos.

“But these are stories. Probably investing in Bitcoin might give you good return but there other alternatives that can give good return, too. Follow your passion that you’re good at. You don’t necessarily have to follow the crowd. You can monetize your strengths and skills to make the money. Bitcoin is not your ticket to retirement,” Mohammed said during the webinar.

Mohammed also warned against those people who ask for peer-to-peer transactions because that could violate the UAE’s anti-money laundering laws.

“There are always dodgy people providing such services, please stay away from them. We have had multiple cases on a daily basis where people say we found this guy on Instagram and Facebook and he put his pictures of driving Rolls-Royce. And there is no documentation in this kind of transaction and this put people at risk.”

He said people also promise to send money directly to their bank account but there is no clue what is the source of these funds.

“Money going into your account might have come from criminal proceeds so you’re indirectly becoming complicit to the crime. We have seen a lot of cases. You need to be aware of such matters and this is very important.”

Nevertheless, he advised people investing in crypto not to put money more than they can afford to lose. “Also, don’t take bank loan and sell your cars. If your cash is in crypto, consider it fun money.”

Firms selling realty against cryptos not authorised

Tarek Mohammed, Head of Digital Assets Crime Section at Dubai Police GHQ, said any company which accepts payments in cryptos is not doing with the blessing and authorization of the UAE government.

Recently, some local real estate companies announced that they were willing to sell their properties to investors against cryptos.

“Fundamentally, real estate companies in the UAE have to deal with the UAE dirham because they are licensed within the jurisdiction of UAE. The fee they pay will have to be the currency of the country,” he added.

 
 

Copyright © 2021 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here.

More From Legal