Financial regulators around the world have to constantly keep an eye out for fraudulent firms that may cause financial loss for potential investors. Scammers and fraudsters set up these firms and make them look like they offer legitimate financial options.
Unsuspecting individuals enter into business with these firms, which are usually based online, and they end up losing their funds. Billions of dollars have been lost to fraudulent financial firms, and this has placed regulators on high alert in the fight against such scams.
CySEC issues warning against a fraudulent firm
A warning appeared on the website for the Cyprus Securities and Exchange Commission (CySEC) on Wednesday. The regulator issued the warning against a site running on the URL binomo.com. As a part of the warning, CySEC said that the website does not belong to a firm that has been granted the necessary authorization to provide investment meant services. The entity has not been given the authority to perform any investment activity either. The regulator says that binomo.com does not satisfy the requirements of Article 5 of Law 87 (I)/2017.
According to the website of the flagged firm, it is an innovative trading platform which offers a range of services, including foreign exchange, stocks, commodities, and cryptocurrencies. These financial options can be accessed from the website or mobile apps.
A representative of Binomo says that their firm has never claimed that it conducts business in Cyprus. They said that they’ve also never claimed to do any business through any firms based in the country and neither have they claimed to carry any license from Cypriot regulators. Due to this, Binomo is lodging an appeal against the warning issued by CySEC because it could potentially affect their business.
Due diligence needed
The financial regulator said that potential investors have to exercise due diligence before they engage in any business with a financial services provider. CySEC encourages investors to consult its website before engaging in any activity with a firm. Visiting the site will help one to determine which firms and entities are registered with the regulatory body. It will also help one know which licenses a particular firm has and which services they can get from the entity.
Several other regulators have issued similar warnings against entities illegally trading in their jurisdictions. Several of these unregulated entities clone legitimate businesses and take advantage of the popularity of genuine brands. On Tuesday, the Financial Conduct Authority (FCA), issued a warning against a cloned entity.
Widespread adoption of financial options, cryptocurrencies especially, has been affected by the fraudulent activity that is associated with the industry. Many potential investors shy away from engaging with these options due to fears of falling victim to scammers. The number of crypto related scams has gone up over the last few years as scammers seek to the advantage of the growing popularity of digital assets.