Swiss Regulator Closes Companies In Connection With Cryptocurrency Scams

Switzerland’s financial regulator, the Swiss Financial Market Supervisory Authority, has taken action to close three companies over their involvement in an alleged cryptocurrency scam.

The body, which is responsible for overseeing financial market activity in Switzerland, delivered closure orders on Marcelco Group AG, Quid Pro Quo Association and Digital Trading AG, as part of their investigations into sales of the so-called “E-Coin.”

The companies were found to be operating without the required regulatory authorization, and were shut down by the regulator on September 19 to prevent any further activity. All three companies are now in the process of liquidation on the instigation of the Financial Market Supervisory Authority.

As part of their investigation, the authority highlighted the unusual, centralized structure of E-Coin. Unlike regular cryptocurrencies, which by definition operate in a decentralized fashion across the distributed ledger, E-Coin was controlled centrally by the companies selling the currency.

Explaining their decision to liquidate, the Financial Market Supervisory Authority said that the businesses had effectively been engaged in deposit-taking, an illegal trade for any organization that doesn’t hold the required financial license.

“Via this platform, these three legal entities accepted funds amounting to at least four million Swiss francs from several hundred users and operated virtual accounts for them in both legal tender and E-Coins. This activity is similar to the deposit-taking business of a bank and is illegal unless the company in question holds the relevant financial market license.”

The decisive action taken against these companies will help inspire confidence in the Financial Market Supervisory Authority, which has also set its sights on other companies operating illegitimately in the sector.

Suisse Finance GmbH, Euro Solution GmbH, and Animax United LP were also targeted in media releases from the body, and were issued warnings over issuing what the authority deems to be “fake” cryptocurrencies.

In addition, several other companies are thought to be under, or pending, investigation from the authority, as it looks to clear up the industry to better protect investors.

“In addition, FINMA is conducting eleven investigations into other presumably unauthorized business models relating to such coins.”