The British Columbia Securities Commission (BCSC), one of Canada’s thirteen provincial regulatory agencies, has included domestic crypto trading platform Canada Bitcoin Exchange Inc. (CBE) to its Investment Caution List, Leap Rate reported March 13.
Citing CBE’s investment plans on its website, the BCSC underscored the startup’s dodgy high-yield investment program (HYIP), offering an unsustainably high return on investment ranging between 3,586% to 7,985% in as little as two days, a glaring hallmark of a typical fraudulent scheme.
As can be expected, such HYIPs typically end up financially drained long before the original investment has even been returned. The fact that the firm neither offers any substantial proof of previous payouts nor provides any licenses legitimizing its operations in any jurisdiction marks another red flag distinctive of a fraudulent scheme.
To prevent any potential investors from being hoodwinked, the BCSC has issued a warning urging the public to do their due diligence before dealing with CBE.
Outlining the multiple risks generally associated with the crypto industry, the regulatory agency noted that while some crypto-related activities are fully regulated, other crypto platforms remain largely beyond regulatory purview, thus, presenting higher risks of potential fraud.
;As regulators across the globe intensify their crackdown on the nascent sector, a number of crypto and blockchain startups have been increasingly flocking to other friendlier territories, including Switzerland, Malta, as well as Eastern Europe.
As it stands, dozens of crypto operators have already migrated to Zug, which reportedly already hosted the largest number of initial coin offerings in 2018, accounting for $700 million of the total raised funds across the globe.
The BCSC is but one among the many other provincial securities watchdogs across over 40 states in Canada and the US that have issued multiple consumer alerts as part of a larger initiative to raise public awareness regarding the risks associated with investing in token sales. On top of issuing a series of warnings, in the last three months, roughly 70 inquiries, as well as 35 ICO-related regulatory measures, have also been initiated.
Similarly, the North American Securities Administrators Association (NASAA) has also initiated a public outreach program cautioning investors of the potential risks entailed to ICOs and digital assets.
In 2018, NASAA has created a task force that would lead an investigation into the ICO and crypto industry. The initiative has since resulted in the crackdown of over hundreds of fraudulent ICO projects.