Swiss Financial Regulator Shuts Down ‘Fake Cryptocurrency,’ Threatens Action Against Others
The Swiss Financial Market Supervisory Authority, or FINMA, announced in a press release today that it has liquidated E-Coin issuer QUID PRO QUO Association as well as two entities, DIGITAL TRADING AG and Marcelo Group AG, which cumulatively collected at least 4 million Swiss francs through the sale of E-Coin to “several hundred users.”
FINMA reports that two distinct concerns prompted this enforcement action: first, neither the association nor the other two involved organizations were licensed for such “deposit-taking business,” and second, E-Coin did not meet FINMA’s standards of a valid cryptocurrency. Rather than existing on a blockchain, as most have come to expect of cryptocurrencies, the E-Coins were located on QUID PRO QUO’s own servers, and in spite of the Association’s claim that 80 percent of the currency was backed by tangible assets, “the actual percentage was significantly lower. Moreover, substantial tranches of E-Coins were issued without sufficient asset backing, leading to a progressive dilution of the E-Coin system.”
With the three involved entities insolvent, “FINMA has also launched bankruptcy liquidation proceedings against them.” In addition to the approximately 2 million Swiss francs worth of assets that the regulatory body has already managed to recover or block, it anticipates potentially seizing more after the conclusion of these proceedings.
FINMA added that certain unnamed parties have targeted former E-Coin users, encouraging them to invest in two other cryptocurrencies that it suspects of being fraudulent.
The press release also warned would-be investors that three companies, Suisse Finance GmbH in Liquidation, Euro Solution GmbH, and Animax United LP, have been recently placed on FINMA’s warning list “due to suspicious activity in the same field,” and that the watchdog, “is conducting eleven investigations into other presumably unauthorised business models relating to such coins.”