The Securities Commission Malaysia (SC) recently warned local consumers and businesses against the usage of Cryptocurrency Automatic Teller Machines (Crypto ATMs).
Crypto ATMs are machines that let individuals purchase and sell digital assets through cash, debit or credit cards or electronic wallets. These machines have been installed in various locations throughout Malaysia. They facilitate the exchange of various cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), among many others, with fiat money and vice versa.
The Malaysian SC warned:
“The SC wishes to alert the public that entities operating Crypto ATMs are considered to be operating a Digital Asset Exchange (DAX) which requires registration with the SC. In this regard, the SC has not authorized any entity to operate Crypto ATMs.”
The SC also noted:
“As such, we wish to caution and remind members of the public not to deal with unlicensed or unauthorized entities or individuals. Those who do so are not protected under the Malaysian securities laws and are exposed to various risks, including fraud and money laundering.”
The SC went on to caution that all unauthorized Crypto ATM operators in the country must immediately suspend all their activities. The regulator warned that operating a DAX without authorization or a permit from the SC is considered an offense under the nation’s securities laws.
The agency confirmed that anyone convicted may be required to pay a fine “not exceeding RM10 million or imprisonment up to ten years or both.”
The SC further noted that members of the general public can verify if a crypto-asset operator has been registered with the SC here.
Investors have also been asked to inform the SC if they come across any suspicious or potentially fraudulent activities or websites. Malaysian residents may also notify the SC if they receive any unsolicited phone calls or emails that claim to offer any type of investment advice and opportunities, particularly those that offer “high returns with seemingly little or no risks.”
The cryptocurrency sector of finance has long been a hotbed for fraud, scams, hacks, and crimes. The relative anonymity (or perceived anonymity) along with the ability to seamlessly transfer value in seconds has been catnip for crooks.
Industry participants have struggled in the ongoing cat and mouse game as the bad guys adapt and find new methods of stealing other people’s money. The regulators, recognizing the opportunity for bad guys, have moved to more tightly regulate the sector – most recently with the FATF travel rule. The emergence of digital assets as a secure sector of Fintech is taking some time.
In June 2020, CipherTrace, a data and cyber-security firm entrenched in the crypto-asset sector, published a report quantifying the activities of crypto-criminals. In a document that covers the first 5 months of 2020, CipherTrace claims that nefarious activities have netted $1.36 billion and thus puts 2020 on track to be a banner year for the bad guys (perhaps topping 2019s $4.5 billion stolen).