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German Financial Watchdog Warns Public About Unauthorized Crypto Offering

BaFin, the German financial watchdog, has warned the public about a crypto offering that was allegedly operating without permission or oversight from regulatory authorities.

The German Federal Financial Supervisory Authority (BaFin) issued a warning Nov. 29 that a firm called Platin Genesis DCC is not authorized or approved by the proper authorities.

In the warning, BaFin states that Platin Genesis was advertising a “Platinum Coin Crypto Fund” on social media, which it claimed was “approved and released by BaFin.” The watchdog clarifies in its statement that this is not true.

Per BaFin, the firm does not have permission under section 34 of the German Banking Act to conduct banking activities or offer financial services. The firm is not under BaFin’s supervision.

The firm’s token “Platincoin” is listed on CoinMarketCap, and is trading at $4.48, down 1.11 percent on its daily chart at press time.

Earlier this month, BaFin ordered a partial cessation of activities of U.K.-based crypto-related firm Finatex Ltd. The firm was ordered to “immediately” put a halt to cross-border proprietary trading on its trading platform, Crypto-Capitals.

Finatex purportedly offered “options, contracts for difference (CFDs) on shares, indices, currencies and commodities,” without authorization by the German Banking Act.  

BaFin has maintained a hawkish stance toward ICOs, and has called for international regulations in the sector. Last month, BaFin chairman Felix Hufeld said that “the number (of ICOs) and the volume (of money) per ICO are both getting higher. Investors have mostly minimal rights.”

Referencing ICOs, Hufeld recommend private investors to “keep away from such things” adding that discussions on ICO regulations were underway in “multiple international forums.”

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Blockchain Is 'Revolutionary,' Says German Finance Regulator Chief

Felix Hufeld, chief of Germany’s financial watchdog, has said blockchain technology is “revolutionary” and its applications could turn the entire financial sector “upside down.”

Hufeld, who is president of the German Financial Supervisory Authority (BaFin), made the remarks during a speech at an event in Berlin last week in which he described the regulator’s thinking on bitcoin and blockchain.

Despite the current hype, “if not a bubble,” around the bitcoin price and the boom of initial coin offerings (ICOs), he said, blockchain’s ability to power distributed applications “could actually be revolutionary.”

He continued:

“These apps are not only safe from failures of individual computers or providers, they also promote the development of a ‘blockchain economy.'”

Further, the BaFin head said blockchain applications have promise in areas that lack “an effective control mechanisms or trustworthy institutions” such as in foreign trade or development aid.

The speech follows remarks by Hufeld in April, in which he stated that he does not want to “kill innovation” in blockchain, though his agency is beefing up efforts to regulate cryptocurrency trading over money-laundering concerns, according to a report at the time.

BaFin also issued new guidelines in February outlining how and when it would consider tokens issued during ICOs to be securities, saying it would take a case-by-case approach in determining the legal status of individual tokens.

BaFin image via Shutterstock

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German Regulator Pledges 'Precise' Oversight of ICOs

Germany’s financial markets regulator has issued new guidance on how it will classify tokens sold during initial coin offerings (ICOs), including those it will consider securities.

On Feb. 20, the Federal Financial Supervisory Authority (BaFin) issued a letter of advice, announcing the move in light of an influx of inquiries from businesses looking to host token sales within Germany. The move follows its warning in late 2017 regarding the risks associated with investing in ICOs.

The letter (of which an English version is not currently available) reveals that BaFin will conduct a “precise case-by-case examination” of tokens to determine their legal status, instead of issuing broad rules that govern the activity. It says that tokens can represent various financial instruments, including stocks, derivatives and digital representations of voting rights.

The agency also used the letter to offer some advice to startups looking to launch ICOs: get in touch. It advises token offers to ascertain whether their respective products fall under existing national and EU-wide regulation.

BaFin also encouraged businesses to be aware of the regulatory grey-area of ICOs and tokens, advising them to get in touch with its offices prior to launching a sale.

Image Credit: Jan von Uxkull-Gyllenband / Shutterstock.com

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German Regulator Orders Crypto Exchange to Halt Brokerage Business

German Financial Supervisory Authority (BaFin) has ordered Crypto.exchange GmbH, a Berlin-based exchange, to immediately stop acting as a financial broker.

The order was issued after the exchange advertised on its website, btc-now.de, that it would sell customer’s bitcoins for euros and sell them on a stock exchange, says BaFin in a statement. The firm claimed the purchase price would be transferred to the investors within 30 minutes, it adds.

According to BaFin, the financial commission business operated by Crypto.exchange GmbH is not authorized by the regulator. The financial watchdog took the decision after users claimed that they did not receive any money for cryptocurrency that was transferred to the firm, Bloomberg states.

“The BaFin order is immediately enforceable by law, but not yet final,” said the release. At press time, the btc-now.de website was not operational.

Back in April, BaFin moved to shut down a payment processor tied to to the OneCoin cryptocurrency scheme, a digital currency service that has faced widespread allegations of fraud, and has been fined 2.6 million euros in Italy.

Weeks later, BaFin issued new cease-and-desist orders to two holding companies connected to OneCoin, ordering the companies to “dismantle their internet based OneCoins trading system.”

Editor’s Note: Some of the statements in this report have been translated from German. 

Euro image via Shutterstock

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Germany's Securities Regulator Warns ICOs Pose 'Numerous Risks'

Germany’s top finance regulator has issued an investor warning on initial coin offerings (ICOs), becoming the latest markets watchdog to comment on the blockchain use case.

The Federal Financial Supervisory Authority (BaFin) said today that investors should be wary of the “numerous risks” involved in token sales, including “the possibility of losing their investment completely.” The agency added that the funding model – through which blockchain-based tokens can be sold and distributed in an effort to bootstrap a new network – is “attracting fraudsters” who may misrepresent their efforts to prospective backers.

BaFin stated in the release:

“Due to the lack of legal requirements and transparency rules, the consumer is left on their own when it comes to verifying the identity, reputability and credit standing of the token provider and understanding and assessing the investment on offer. It can also not be guaranteed that personal data will be protected in accordance with German standards.”

The release followed a report in local media that indicated BaFin was preparing some kind of statement, though unlike those issued by other regulators from around the world, the agency’s statement stops short of imposing any new requirements or guidelines for organizers. A more comprehensive guide for investors will be released on Nov. 15, according to today’s announcement.

“Before any consumer decides to participate in an ICO, they should make certain that they have fully understood the benefits and risks of the project or investment,” the regulator warned.

Though BaFin didn’t indicate that it might seek enforcement action against any ICO organizers – as has happened previously in countries like the U.S. – the agency suggested generally that “authorities taking necessary measures” could result in potential losses for investors in token sales that prove to be fraudulent in nature.

Image Credit: Jan von Uxkull-Gyllenband / Shutterstock.com

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.