Compliance for Crypto

Poland’s KNF Warns Investors Off High-risk Products

Poland’s financial regulator, the Polish Financial Supervision ‎Authority (KNF), found local investors were taking on too much risk when investing, with stocks and cryptocurrencies platforms behind the greater risk exposure.

Poles were also warned not to fall for scams in which digital crooks use fake celebrity endorsements to promote investments. A greater use of social media websites has been identified as one of the reasons for this, with dummies in particular were more likely to be reliant on Facebook or twitter for investment tips.

The KNF further explains that such adverts on social media encourage people to visit websites that host phony endorsements about “get rich quick” schemes. Victims are asked to click on a link to make “a concrete investment”, but the money is really being sent to fraudsters, the regulator explained.

“Another popular way is through numerous advertisements of dishonest investment platforms that have a characteristic pattern. Most often they use the image of famous people convincing about high profits, and as the company’s headquarters they provide the most prestigious addresses not only in Poland, but also in Europe. Of course, after verification, these addresses turn out to be false,” the statement reads.

The watchdog also found that investors looking to profit from the latest crypto boom must be ready to lose everything. The KNF’s concerns include price volatility, the complexity of products offered and the lack of consumer protection regulation around many of crypto assets.

The rise Bitcoin price over the last few months has made the cryptocurrency a household investment. However, the authority noted the lack of proper regulations in place and that crypto is difficult to understand and convert back to cash. Thus, crypto assets are somewhat murky investments and are difficult to be kept safe, unlike ‎strictly regulated traditional financial markets.

A Surge in Impersonation Scams

The Warsaw watchdog added it was aware of investment cold-calls, which featured the regulator’s name being involved in monitoring the progress of proposed crypto-asset transactions. The general setup seems to be that the fraudsters call a consumer, ask them to sell or buy cryptocurrencies, and then tell them that KNF staff will participate in the process to ensure the consumer’s investment is legal.

Once fraudsters have targeted an investor for one of these crypto scams, they are relentless in their communications. Phone calls start out as friendly and business-like, albeit usually very persistent. Meanwhile, the regulator urges customers concerned about or involved in such transactions, to get in touch.

According to the KNF’s website, trading in crypto-assets and trading venues themselves are not prohibited by law, and therefore, its transactions are ‘legal in the territory of the Republic of Poland.’

Poland has made localized attempts to regulate specific aspects of cryptocurrencies. While some of those instances are more concerning than others, none of it has officially banned the virtual asset class. Instead, the country has taken a stance similar to other countries to regulate the sector and prevent its use in criminal activities.