The United Arab Emirates (UAE) is going to be hard on crypto scammers as it works to end all fraud in the industry. Regulators have stated that anyone taking part in a crypto scam of any kind will face up to five years in prison and be required to pay a hefty fee. This new law is set to take effect tomorrow on January 2, 2022.
The UAE Works to Handle Crypto Scams
2021 was arguably the year for crypto. Bitcoin, for example, rose to a whopping $68,000 per unit – the highest it’s ever been – last November, while companies like Pro Shares got approval on new bitcoin ETFs that have been quite popular with most traders. However, there has been a catch as with the development of crypto and its crossing into mainstream territory, more criminals have gotten involved, seeing digital currency as a quick and easy way to make some illicit funds.
This has caused cybercrime to shoot through the roof, and many countries are looking to take swift action as a means of preventing the problem from getting any worse. The UAE is clearly setting the example. In a discussion about specific details regarding the law, Dr. Hassan Elhais of Al Rowaad Advocates explained:
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 unrecognized by authorities in the country.
This is the first time the UAE is looking to officially punish the promotion of illicit cryptocurrency projects. While the practice has always been banned, the country has never bothered to initiate penalties. This marks a first for the UAE as it works to end crypto fraud. Elhais further stated:
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 license from competent authorities.
The amount of crypto theft to occur as of late has grown exponentially according to a recent report published by blockchain analysis firm Chainalysis. Hackers have exploited multiple vulnerabilities and made off with nearly $8 billion in crypto throughout 2021.
“Rug Pulls” Were at the Core of Last Year’s Problems
Much of this money was lost to what are known as “rug pulls.” This occurs when a developer works on a new coin or project, gets investors to give their money, then abandons the project completely and runs off with all the funds. It is estimated that nearly $3 billion was lost in 2021 to these kinds of scams.
Between 2020 and 2021, the amount of crypto fraud occurring in the space grew by more than 80 percent. Among the most notable instances to occur involved the hacking of the Colonial Pipeline, though much of that money was ultimately intercepted by the FBI.
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