In a bid to cease cryptocurrency scams, the United Arab Emirates (UAE) is passing stringent rules for crypto scammers targeting investors in the country. Cryptocurrency scammers will entail prison time for up to five years in the UAE ,as well as face penalty up to AED 1 Million (roughly R. 2 crore), starting January 2, 2022.
Crypto scams aim to gain private information such as ‘private key’or pass codes to trick unsuspecting individuals into sending cryptocurrency to a compromised digital wallet.
“As per article 48, posting misleading ads or inaccurate data online about any product will be subject to legal repercussions. The same penalty applies to members of the public who promote cryptocurrencies unrecognised by authorities in the country,” said Dr. Hassan Elhais of Al Rowaad Advocates, as quoted by The National.
While the previous UAE laws banned promoting cryptocurrencies but didn’t penalise it. The amendments introduced punishments against the offence, which is a first for the country. “It imposes a penalty of five years in prison and/or a fine between Dh250,000 and Dh1 million against those who promote electronic currencies or fake companies to raise money from the public without a licence from competent authorities,” Elhais added.
Meanwhile, a recent report by Chainalysis revealed that hackers have exploited vulnerabilities within crypto platforms or used traditional scamming methods like ‘rug pull’, mooching off over $7.7 billion (Rs 58,698 crore approx.) worth of cryptocurrency from victims in 2021.
At least 36 per cent of the victims lost over $2.8 billion (Rs 280 crores approx.) to ‘rug pull’ cases. A rug pull is a malicious maneuver in the cryptocurrency industry where crypto developers abandon a project and run away with investors’ funds. In total, crypto scams rose by 81 percent this year from 2020 led by rug pulls, the company said in a blog post.
In August alone, hackers pulled off one of the biggest ever cryptocurrency heists stealing $613 million in digital coins from token-swapping platform Poly Network. However, the hackers returned $260 million worth of tokens in less than 24 hours.
Earlier, in November, US Federal Bureau of Investigation (FBI) had issued a warning against cybercriminals that are using Bitcoin ATMs and QR codes to defraud unsuspecting individuals. The FBI in a recently released Public Service Announcement (PSA), said that it has witnessed an increase in scammers directing victims to use physical cryptocurrency ATMs and digital QR codes to complete payment transactions.