Germany's BaFin Issues Warning Against

Germany’s top financial regulator BaFin has issued a warning, announcing that is operating without its authorization.

October 23, 2020 | AtoZ Markets – The German federal financial supervisory authority (BaFin) Friday warned of the dangers posed by offshore brokers that continue to chase online trading business, including within the gray area of the country’s cryptocurrency sector.

BaFin says unlawfully targets Germans

Specifically, Bafin has marked another firm with the red flag. The independent regulator highlighted that a company called 10cryptomarket is running an illegal business without acquiring proper authorization. The firm offers German customers Forex products, cryptocurrency, stocks, indices, and commodities.

"The operator of the platform is thus conducting proprietary trading dealing on own account within the meaning of section 1 (1a) sentence 2 no. 4 (c) of the KWG on a commercial basis. Neither the trading platform nor its operator hold the authorisation required under section 32 (1) of the KWG and are therefore conducting unauthorised business," Bafin said.

A look at the website shows that it does not contain information on the company's registered office or the entity responsible. However, the watchdog says it "has evidence of an (alleged) business address in the U.K. Persons using e-mail addresses containing the domain approach German investors and claim to be employees of an “authorisation department” acting on behalf of an “exchange supervisory office”.

Either way, BaFin urged its citizens to be careful and follow due verification processes, check the company’s identity (identity details, country of establishment, etc.), and never to trust a company if it cannot be clearly identified.

The need for German investors to be wary

According to BaFin, the number of fraudsters has grown increasingly in recent ‎years. To prevent fraudulent practices, BaFin has issued several guidelines that encourage potential investors to be wary of promises of disproportionate returns.

Related: New BaFin Note Will Help Investors to Identify Fraudsters

A commonly adopted tactic that scammers use is to ‎advertise an illegal operation as a reputable brand or ‎entity.

In September 2018, BaFin issued a warning regarding a scam company that allegedly registered its office in Berlin, claiming that it was authorized by BaFin. Crypto firms operating in Germany have to apply for a license to BaFin since the end of 2019 when the new Anti-Money Laundering (AML) regulations came into effect.

As a result, BaFin is strongly ‎advising investors against funding an account or investing via the aforementioned firm. Anyone who ‎chooses to sign up with an unauthorized firm should bear in mind that they will not receive the ‎financial authorities’ assistance if they are defrauded.‎

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