View all newsletters
Receive our newsletter - data, insights and analysis delivered to you

Crypto Scandals Show We Need Better Checks and Balances

"The upcoming Fifth Money Laundering Directive (5MLD), which comes into force on January 10th 2020 will make cryptocurrencies and cryptocurrency exchanges “obliged entities”, which means they face the same AML/CFT regulations applied to financial institutions"

By CBR Staff Writer

Tales of stolen crypto and scams always hog the headlines, writes Alex Batlin, CEO, Trustology. The recent OneCoin scandal positioned as the future of money and the rival of Bitcoin is a case in point. Many people believed the hype, all seemingly convinced that OneCoin was legitimate. They were also spurred on by the fear of missing out. There was a strong urgency to act and people did. Piles of money swiftly poured into the crypto deal. 

By 2017, just two years after the official launch of OneCoin, the founder Dr. Ruja Ignatova went missing. The FBI was on her case.  She had pulled off the biggest crypto heist in history. Just a few months ago, another high profile case had surfaced surrounding DasCoin crypto, a currency that was debunked as an elaborate ponzi scam – leading to huge losses for investors. 

Alex Batlin, CEO, Trustology

Scams such as these, do nothing but tarnish an industry poised to create value for many and creates a barrier to mass adoption. 

Due diligence is a must, and that responsibility still solely rests on the shoulders of the investors. The crypto space itself is still a relatively new field, and with so many kinds of crypto out there already only a handful are well known. Even fewer have the established reputation of Bitcoin or Ethereum.  There’s a critical urgency to educate investors about the need to carefully vet coins before buying them.   

Better Checks and Balances 

Stronger links with police enforcement and regulators would help to safeguard crypto currencies and its users.  People listen to the authorities – and trust them to be looking out for the interests. While regulators are working on ways to better protect investors with stronger compliance measures such as KYC and AML, it will be up to service providers to make it happen.

5MLD and its Impact on the Crypto World

The most significant response in tackling the issue is the upcoming Fifth Money Laundering Directive (5MLD), which comes into force on January 10th 2020.  The directive is far-reaching and makes bold steps towards the treatment of cryptocurrency and better protection for asset holders. 

This includes the consideration of cryptocurrencies and cryptocurrency exchanges as “obliged entities”, which means they face the same AML/CFT regulations applied to financial institutions under the previous 4MLD legislation. Under this measure, there will be legal obligations to perform customer due diligence (CDD), and submit suspicious activity reports (SARs).

Content from our partners
Scan and deliver
GenAI cybersecurity: "A super-human analyst, with a brain the size of a planet."
Cloud, AI, and cyber security – highlights from DTX Manchester

5MLD also gives Financial Intelligence Units (FIUs) the authority to obtain the addresses and identities of owners of virtual currency. 

Another significant measure is the introduction of regulation for providers of cryptocurrency exchanges and wallets – which will have to be registered with regulation authorities in their domestic locations, like the FCA in the UK. 

The introduction of these regulations sets legal boundaries for cryptocurrency products and and is aimed at instilling confidence among consumers.

Doing our Part in Safeguarding  

As a custodial wallet service provider, our primary focus is keeping investors’ private keys and crypto safe.  We implement robust procedures around AML compliance utilising the support of both Onfido and Chainalysis. Our know your transaction (KYT) and know your customer (KYC) processes in place ensures we’ve conducted exhaustive checks, in addition to ongoing suspicious activity reporting. 

We must continue our progress in the protection of assets. If we don’t act swiftly to address the challenges to adoption, people will continue to miss out on the positive role that cryptocurrencies can play in our society and the global financial system.  

Regulation like 5AMLD is a step in the right direction but it is through the combined efforts of investors, regulators, law enforcement officials and the crypto community that will yield more favorable results in addressing security issues once and for all. 

The future of money depends on it.


Topics in this article : , , ,
Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.