Switzerland Shuts Down ‘Fake’ Cryptocurrency Scheme “E-Coin”
Switzerland’s financial watchdog has cracked down on operations of “E-Coin”, an alleged ‘fake’ cryptocurrency scam.
The Swiss Financial Market Supervisory Authority (FINMA), the country’s financial markets regulator and watchdog has revealed the closure of three separate companies involved in issuing “E-Coin”, alleged by the authority as a fake cryptocurrency.
In an announcement , the watchdog revealed that ‘Quid Pro Quo Association’ had developed and begun issuing E-Coins since 2016. The company, working with Digital Trading AG and Marcelo Group AG, also launched an online trading platform for the E-Coins to be traded and transferred. Since 2016, the three companies raked in some 4 million Swiss francs (approx. $4.1 million) from hundreds of Swiss investors.
The authority wrote:
Via this platform, these three legal entities accepted funds amounting to at least four million Swiss francs from several hundred users and operated virtual accounts for them in both legal tender and E-Coins.
As things stand, FINMA has seized and blocked assets worth approximately two million Swiss francs.
Not a Real Cryptocurrency
The authority notably distinguished E-Coin from decentralized, blockchain-based cryptocurrencies.
“Unlike real cryptocurrencies, which are stored on distributed networks and use blockchain technology, E-Coins were completely under the providers’ control and stored locally on its servers,” the regulator revealed.
Apart from its investigation into E-Coin, FINMA also confirmed it was conducting eleven separate investigations into “other presumably unauthorized business models relating to such [fake] coins.’
Bitcoin-Friendly Swiss
The financial regulator has notably embraced bitcoin startups in the past in granting an early ‘conditional approval’ to wallet provider Xapo to operate in the country. FINMA is notably tasked by the country’s Federal Council to grant FinTech licenses for industry startups as a part of the country’s FinTech-friendly agenda.
In issuing a stern warning about “unscrupulous cryptocurrency providers’, the watchdog added:
FINMA welcomes innovation, but when innovative business models are misused for unauthorized activities, FINMA intervenes.
With its crackdown against E-Coin operators, FINMA has also launched law enforcement proceedings against those involved and has liquidated the assets of all three companies.
Featured image from Shutterstock.
