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UAE Investors finding downsides to Crypto Investments

“They issued me a certificate and allotted me coins,  they even issued me some bonus coins because the final listing of the currency was getting delayed,” said the investor

The Securities and Commodities Authority (SCA), the government body that regulates UAE’s financial and commodities markets issued a circular in 2018, in which it warned investors against digital token fundraising, including Initial Coin Offerings.

The SCA, had previously said that it does not recognize, regulate or supervise any ICOs, and by investing in any ICOs, the investors are doing so at their own risk.

ICOs may be issued abroad, and therefore are subject to foreign laws that can be difficult to verify. And therefore, tracking and recovering funds in cases where ICOs have collapsed may prove to be extremely difficult.

A study conducted in 2018 revealed that over 80 per cent of ICOs from that year were scams and that only 8 percent of the floated ICOs managed to reach the trading stage on various cryptocurrency exchanges.

This is what Anna Tutova, CEO of crypto consultancy Coinstelegram, has to say to investors looking to break into the business.

“First of all, companies should have legal registration, all appropriate licenses, if required,” said Tutova.

“Secondly, we should check the team: what is their background, whether they delivered successful projects in the past, whether this team can execute, what they promise.

Investing in crypto assets still comes with outsized risks and it’s not just about the inherent volatility in their values. UAE based investors are finding this out at a steep cost to themselves.

“They issued me a certificate and allotted me coins,  they even issued me some bonus coins because the final listing of the currency was getting delayed,” said the investor

“They informed me that the market was going down and that they would list mCoin on an exchange later.”

The investor immediately tried reaching out to the company’s offices in UK and UAE. Predictably, he did not get a response. After a long gap, Kumar received a mail from mCoin saying that the listing was still progressing.

“When I asked them for their office number, they didn’t give any,” he said.

Later, he found out that the UAE bank account of ONEm Communications, the firm behind mCoin, had closed. “For the last one year there has been no news from them – from ADIB, I came to know that their bank account is also closed.”

Now, if a cryptocurrency is not on an exchange, investors can’t buy or sell coins on the market. That essentially means the investor is holding an asset that’s practically worthless.

“They communicated with me for another 3-4 months and updating me on the status of the listing but that stopped after a while,” the investor added. “After a while I began hearing complaints about other investors not getting their money back.”

“There are some projects, which hire some well-known figures, however these people can be only for marketing purposes. That should be evaluated that too.

“Third thing is the idea, what the company offers. Does this product really solve existing problems? Is there demand for it? How feasible is the project and its goals? On which stage is the product? How good is the technology?”

 

 

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Crypto Stats


CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin38,917 0.81 % 1.47 % 25.83 %
Ethereum2,327.4 0.77 % 0.25 % 27.53 %
Tether1.000 0.02 % 0.00 % 0.03 %
Binance Coin320.08 0.57 % 0.80 % 13.41 %
Cardano1.320 0.77 % 0.85 % 17.04 %
XRP0.6547 0.28 % 0.17 % 16.88 %
USD Coin1.010 0.00 % 0.82 % 0.75 %
Dogecoin0.2084 0.58 % 5.38 % 20.55 %
Polkadot14.58 0.80 % 0.27 % 26.36 %
Binance USD1.010 0.10 % 0.84 % 0.80 %

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