Dubai residents have lost Dh80 million to crypto scams in 2021: How to secure yourself?

    09 Jun 2021

    Residents of Dubai lost above AED80 million in crypto scams since the beginning of 2021, the Dubai Police official said.

    There have been over 200 cases of crypto scams in the UAE this year, revealed Tarek Mohammed, Head of the Digital Assets Crime Section at the Dubai Police GHQ.

    He has provided online a virtual session regarding “Mistakes to avoid when investing in crypto assets.” Mohammed said the scams have been committed in many forms, such as fake cryptocurrencies and Ponzi schemes.

    “When we tell this number to people, they say: is it really possible that Dh80 million was lost in the first half of 2021?” Mohammed said. “We need to safeguard ourselves… So always, always, always do due diligence with whom you deal with and work with. This is very important. There are great public resources on the Ministry of Economy website where you can have such information,” he added.

    And considering the recent DubaiCoin scam, Mohammed said the Dubai Police are going to be not reactive but rather proactive.

    The Digital Assets Crime Section has been created in 2021 as an initiative of Chief of Dubai Police Lt-Gen Abdullah Al Marri to proactive responses on the growing digital crime activity. The Dubai Police University Student Council organized this webinar as part of the public awareness campaign.

    Mohammed added the Dubai Police activity is now based on anti-money-laundering laws and a set of Financial Action Task Force (FATF) guidelines issued in 2018 to averse virtual asset scams.

    Secure yourself

    Head of the Digital Assets Crime Section announced some coming soon laws, defining clear guidelines of crypto security.

    Independent free zones, such as Abu Dhabi Global Markets and DMCC, etc., come up with preliminary guides that allow regulations to operate for some companies. But companies outside such zones are not allowed to conduct virtual asset business.

    He added it takes time to proceed against these cases since a lot of companies or individuals operate overseas. So it becomes a challenge to pursue companies licensed in a third country – outside the UAE’s jurisdiction.

    Do due diligence before decisions

    Mohammed firmly recommended investors in Dubai act due diligence before making any decisions.

    “There is no harm in asking companies and people to provide them with a copy of trade license because it’s public information and not confidential. Also, make sure the license is not photoshopped because there have been some cases of documents being photoshopped,” he warned on a webinar.

    Mohammed said that these “wonderful stories” of people becoming millionaires by investing in cryptos are just stories. “Probably investing in Bitcoin might give you a good return but there other alternatives that can give a good return, too. Follow your passion. You don’t necessarily have to follow the crowd. You can monetize your strengths and skills to make money. Bitcoin is not your ticket to retirement.”

    He warned as well against peer-to-peer transactions because that could violate the UAE’s anti-money-laundering laws.

    “There are always dodgy people providing such services, please stay away from them. We have had multiple cases on a daily basis where people say ‘we found this guy on Instagram and Facebook and he put his pictures of driving Rolls-Royce’. There is no documentation in this kind of transaction and these put people at risk.”

    Mohammed noticed that people usually promise to send funds directly to the bank account, but the recipients have no idea about the source of this money.

    “Money going into your account might have come from criminal proceeds so you’re indirectly becoming complicit in the crime. We have seen a lot of cases. You need to be aware of such matters and this is very important.”

    However, Head of the Digital Assets Crime Section recommended people not put money in crypto more than they can afford to lose. “Also, don’t take a bank loan and sell your cars. If your cash is in crypto, consider it fun money.”

    Selling in crypto not authorized

    Also, companies accepting payments in cryptos do not have the authorization of the UAE government for such activity, warned Mohammed.

    According to his words, some local real estate companies announced to investors recently that they ready to sell their properties in crypto. “Fundamentally, real estate companies in the UAE have to deal with the UAE dirham because they are licensed within the jurisdiction of UAE. The fee they pay will have to be the currency of the country,” the Dubai Police official resumed.

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