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BaFin warns: Fake Cannabis traders

BaFin warns: Fake Cannabis traders

March 7, 2019, | AtoZ Markets - German Federal Financial Supervision Authority (BaFin), flagged another trading company as suspicious. This time it is "The Cannabis Trader", which, according to BaFin appears to offer cannabis derivatives without following financial laws.

Fake cannabis traders trying to profit from cannabis boom

More scammers are trying to capitalize on a new asset class. Over the past couple of months, marijuana stocks have been a profitable opportunity for investors, and thus retail brokers have stepped in to meet this demand. However, the financial regulators are warning investors who have suffered from the cryptocurrency boom to be very careful when investing in another controversial asset. The experts suggest that cannabis assets might be a possible candidate for the next bubble.

Fake cannabis traders were operating in Germany without a license

BaFin indicates in its official statement that the “The Cannabis Trader” does not have permission, in accordance with § 32 of the German Banking Act (KWG), to conduct banking activities or provide financial services in Germany. As the German financial authority reports, the flagged company contacts potential German customers by email.

The brief description of the fake trader operations

Within the anonymously registered domain of thecannabistraders.com, the firm offers to use CFD trading software called “The Cannabis Trading App”. As the “The Cannabis Trader” claims on its website, the software automates CFD trading based on the cannabis exchange algorithm. The allegedly certified online trading platform offers German customers CFDs that supposedly give them access to a handful of companies operating in the growing cannabis industry.

The fake traders did not provide the company's location 

The registration on the Bafin flagged company’s website for those who want to learn how to profit from trading in cannabis stocks is free, but the minimum balance should be 500 euros or 250 US dollars. The company promises investors "a return of 1000 percent over three years." Atoz Markets visited the website of the suspicious company and found that there is no imprint on the whole site, no information on the location or legal information of the firm. Seem like the company does not have any regulatory status in any jurisdiction.

Cannabis traders are becoming popular

A growing number of countries are voting to legalize the use of marijuana. Therefore, investor interest in the new asset is growing. After many years of difficult access to capital, the year 2018 has become a noticeable improvement for US cannabis operators. The marijuana companies started expanding their capacities, diversifying their product lines and acquiring to improve differentiation from their peers and support their long-term growth and profit-making prospects. However, the “real” cannabis industry, sometimes referred to as the “Wild West of Investing,” is crowded with potentially overvalued companies and scammers.

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.

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