Public warned to thoroughly investigate crypto-projects to protect against fraud

Chief Executive Officer of the Eastern Caribbean Securities Regulatory Commission (ECSRC), Alousia Faisal (Photo courtesy ECSRC)
- Advertisement -

By Robert A. Emmanuel

[email protected]

Individuals are being encouraged to do thorough research to protect themselves against fraudulent cryptocurrency exchanges.

The advice comes from Chief Executive Officer of the Eastern Caribbean Securities Regulatory Commission (ECSRC), Alousia Faisal.

Following the collapse of FTX Trading Ltd (simply known as “FTX”) and subsequent investigations against former CEO Sam Bankman-Fried and former executives, Observer spoke to Faisal about how ordinary citizens can protect themselves when investing.

“If somebody comes up to you and says invest in ‘XYZ’ token, we will want, from the ECSRC perspective, that persons deal with that type of situation in the same way as they would any other investment scam,” she said.

She also warned that people should not invest in anything if they do not understand the business model, explaining that one should not believe in promises of easily obtainable wealth.

“If the deal sounds too good to be true then it usually is; there is no such thing as a guaranteed return or trading strategy and if someone tells you there is no risk of losing money, do not invest,” Faisal explained, adding that individuals should seek as many expert opinions as possible before investing.

Antigua and Barbuda, as with many other Caribbean countries, has been increasingly looking at cryptocurrency as a means of increasing the country’s revenues.

However, there has been some debate in the US over whether cryptocurrency is a commodity— like oil, gold, and agricultural goods—or a security, like stocks and bonds.

Faisal explained that cryptocurrency and other such technology are defined as digital assets under Antigua and Barbuda’s Digital Assets Business Act 2020 which regulates the use of blockchain, cryptocurrencies and digital token projects and businesses.

“The Eastern Caribbean Central Bank and other regulatory bodies such as Antigua and Barbuda’s Financial Services Regulatory Commission have decided that cryptocurrencies would fall under the classification of digital asset,” she said.

After FTX’s collapse in November 2022, it was revealed that its parent company was incorporated in Antigua and Barbuda but had not been given a licence to operate. Prime Minister Gaston Browne said the country had been spared being implicated in the scheme as the country’s regulators did not understand the business model.

“It spared us some embarrassment. I saw it as a missed opportunity initially,” he said at the time.

The Political Leader of the United Progressive Party, Harold Lovell, has also expressed support for the development of the country’s cryptocurrency market, stating it was “like any new technology”.

“There is no inherently bad technology; it is the use to which the technology is put. Cryptocurrency…is making waves all over the world, [and] there are issues of course… but that doesn’t invalidate it,” Lovell said.

Meanwhile, as legal proceedings against former executives of FTX unfold in the Bahamas and United States, Faisal said she believes, while it is still early days, there will be lessons to be learnt from this for the Caribbean.

“The US is still trying to wade through and uncover this web of companies and find out what was going on so it is difficult to say what are the lessons that we should be learning from this, but I believe there are lessons that we can learn,” she said.

The ECSRC is an independent and autonomous regional regulatory body established in 2001, charged with protecting investors from unfair and fraudulent practices and fostering a fair and transparent Eastern Caribbean Securities Market.

- Advertisement -