More than ever, crypto-investors in UAE need awareness and
defense against scams. Michael Kortbawi speaks to Gulf News on how
to avoid crypto-scams.
It has become clear that the UAE has recognised the tremendous
potential of cryptocurrency and blockchain technologies, and is set
to be a hyper-connected city as well as an ever-evolving business
hub. One of the outcomes of Dubai’s will to become a global
centre for crypto assets is the establishment of the largest crypto
exchange platforms.
For instance, Binance, the world’s leading cryptocurrency
trading platform, was granted a licence to operate in Dubai, and in
April 2022, Bybit and crypto.com announced their establishment
here. Moreover, Dubai has enacted a new law aimed at establishing
the emirate as an international centre for crypto assets and
related industries, such as the metaverse, and creating the Dubai
Virtual Assets Regulatory Authority to oversee the regulation,
governance, and licensing of virtual assets.
Unfortunately, the downside of the exponential growth of crypto
industry is the increase of crypto scams in the UAE. According to
the Head of the Digital Assets Crime Section at the Dubai Police,
in the first half of 2021, there were hundreds of crypto scams in
Dubai with Dh80 million lost in total.
Crypto scams occur using diverse means, as outlined below:
Transfer recall scam: The scammer buys
cryptocurrencies and sends funds to the seller and they receive the
tokens. However, he then files a fraudulent complaint with their
bank to recall the transferred funds.
Peer-to-peer transactions using illegally gained
money: A person offers to purchase tokens at a fair price,
which is in fact from criminal proceedings. The victim indirectly
becomes a partner in the crime.
Rubber cheque: The scammer offers to buy
cryptocurrency at a decent price using a rubber cheque.
Third-party scam: The scammer, posing as a
broker, finds a seller and a buyer, convinces them to meet in
person for the transaction and asks the buyer to bring cash. He
then gives the buyer’s money to the seller and asks the seller
to send the cryptocurrency to a trading account, which is his own
account instead of the buyer’s account.
Copycat administrator: Occurs in Telegram
groups, often after a member of the group requests advice. The
scammer messages the user, posing as an administrator, offers help
which involves asking for the target’s private keys or
requesting that they login into a fake platform meant to steal the
member’s account details and have access to their wallet.
Pump-and-dump crypto group: The scammer
attempts to coordinate price manipulation on a cryptocurrency
exchange. Tokens are then pumped by the scammer (the founder or an
insider), who then sells his tokens on a short-lived exponential
rise in price on crypto-exchanges, which then crashes.
Giveaway scam: The victim is tricked by being
offered free cryptocurrency or NFTs in exchange for his
wallets’ public addresses and private keys. The giveaway
advertisement can be from legitimate pages.
Counterfeit NFTs: The scammer hacks an NFT,
recreates it and sells it on legitimate platforms.
In most of these scams, the scammer enters into agreements with
the victim without making it formal. Therefore, it becomes harder
for the victim to proceed with legal action against the
scammer.
How to avoid such scams
First and foremost, it is fundamental that no personal information
is shared and that anonymous calls, messages and ads are
ignored.
The Digital Assets Crime Section of Dubai Police was created
last year as a proactive approach in response to the increase of
cybercrimes happening around crypto matters. The head of section
stated: “There is no harm in asking companies and people to
provide them with a copy of trade license because it’s public
information and not confidential. Also make sure the license is not
photoshopped.”
Then, it is essential to conduct all transactions using exchange
platforms that are regulated by the UAE financial regulator by
checking for example with Dubai Financial Service Regulatory
Authority (DFSA) or the Abu Dhabi Global Market (ADGM) for their
licence and regulatory permission.
The UAE Security and Commodities Authority (SCA) has a list of
alerts for falsely claiming to be regulated by it. As for DIFC, the
DFSA has sent alerts about fraudulent crypto-assets.
Written by Michael Kortbawi and Felicien Penetrat.
The original article can be read here: UAE empowers crypto investors to fights against
scamsters.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
