The CySEC Scam Tourism – Launch of Investigative Series

CySEC and Scam Tourism
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CySEC is the financial supervisory authority of the Republic of Cyprus and a sort of gatekeeper for the EU financial markets. Cyprus has developed into the single most important gateway to EU financial markets for non-EU citizens and organizations. The Israeli financial scene in particular makes intensive use of this gateway. But also Russian individuals and companies enter the EU financial markets via Cyprus. The CySEC is controversial within the EU regulators because of its “relaxed” approach. Recently, other regulators like CONSOB and FCA have blocked CySEC-regulated companies to protect their own citizens from CySEC-regulated perpetrators.

Lucrative scam tourism

The situation of CySEC-regulated Cyprus Investment Firms (CIF) has been on the research agenda of FinTelegram News’ research team since its launch in early 2018. The hot and sunny island, which lies just under 300 km off Israel and one hour’s flight away from Tel-Aviv, has become the off-shore headquarters of many Israeli scammers during the era of binary options and forex trading.

As a matter of fact, the financial ecosphere around the CySEC has made a lot of money with the fraudulent Israeli binary options industry over the last years. Scam tourism has been a major source of income for Cypriot lawyers, consultants, and the CySEC itself.

For conflicts between clients of CySEC CIFs, a financial ombudsman was established. Currently, this ombudsman is involved in some cases concerning the CIF Maxigrid Ltd with the CIF No 145/11, for example.

Cyprus is also the home of FinTechs that are not regulated by CySEC although they should be regulated. Praxis Cashier System Ltd of the Israeli Amit Klatchko, registered in Cyprus with the company no HE358607, is worth mentioning here. This company is literally involved in hundreds of scams as a facilitator. In any other EU country, the activities of this company would require authorization. The CySEC does not seem to see it that way, and thus practice Cashier can unscrupulously assist scams to defraud EU citizens.

Starting the investigation case

FinTelegram has been involved in recent weeks by victims of various broker scams such as RoyalsFX or LincolnFX. These victims have lost hundreds of thousands of Euros with these Broker scams. One of the victims actually lost 52 Bitcoins (BTC) worth more than €600,000. Other victims from Greece lost several hundred thousand Euros. Thus, we are not talking about change and, additionally, there are hundreds of other victims of these scams.

When looking through the documents provided by the victims it turned out that the CySEC CIF Maxigrid has been directly involved in the scams as a payment processor and crypto investment partner via its now closed and vanished crypto trading platform Bitandbuy (www.bitandbuy.com).

The victims initially tried without success to recover their funds back from the scams. In addition, they turned to Maxigrid as the operator of the scam facilitating BitandBuy and/or as the payment processor of the scams. So far also without result. Now the Financial Ombudsman of the Republic of Cyprus (www.financialombudsman.gov.cy) was called in. He already has confirmed his involvement via email.

Looking Into the CySEC Ecosphere

FinTelegram will accompany the process in the next weeks around the clarification of the complaints around the scams and Maxigrid. This current situation with the involvement of the Ombudsman is a perfect occasion to look deeper into the CySEC ecosphere. How does the CySEC and how does the Ombudsman deal with complaints from EU citizens who have been harmed with the involvement of CySEC-regulated entities?

Share information

If you are a victim of one of the scams, and/or if you have made payments to scams via CySEC-regulated companies like Maxigrid and/or have experience in dealing with the Financial Ombudsman and/or have experience with CySEC, please report this to FinTelegram. You can also make the information anonymously through our whistleblower system.

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