Cryptocurrency has been with us for over a decade now and yet there is no consistency regarding regulations to protect consumers and govern the crypto market. In a speech at the Piper Sandler Global Exchange & Fintech Conference in New York the chair of United States Securities and Exchange Commission (SEC), Gary Gensler, gave the keynote speech during which he likened the present crypto market to the stock market in the United States in 1920. He commented "...it is full of "hucksters," "fraudsters" "scam artists" and "Ponzi schemes..." and further indicated that just as the securities laws in 1933 and1934 rectified the stock market at the time, so can the crypto market be made sound by applying similar laws.The alarming rise of crypto frauds has resulted in a 183% increase in SEC's legal actions related to crypto.
Demetri Bezaintes,an associate, commented "in the United Kingdom the the Bank of England, issues and administers the money that is in daily use. In contrary, cryptocurrency is developed by decentralised individuals and/or companies." Demetri further pointed out "the information available relating to such organisations is often vague and as crypto dealings are most of the time not subject to regulation in the UK. However, the Financial Conduct Authority (FCA) is introducing new rules for marketing crypto assets. Should things go wrong there is still no safety net, as there is with other types of financial fraud. The market is decentralised which many crypto investors believe reduces the risk of theft by hacking. However, the removal of the second pair of eyes that trusted intermediaries like financial institutions bring, means that there is greater exposure to fraudsters. Many investors are lured by the promise of high levels of return on investment and close their eyes to the volatility of the crypto market and the fact that if the market drops it drops extremely swiftly with little or no warning, nearly always resulting in wiping out any gains. Similarly, the ever-present risk of fraud is often ignored."
Giambrone & Partners banking and financial fraud litigation lawyers are leading lawyers in the fight against financial fraud, crypto fraud in particular and have considerable success in recovering our clients' funds lost to various crypto frauds. Our lawyers' ground-breaking case D'Aloia v Persons Unknown & Others was the first case in Europe (second in the world) where the court permitted the service of legal papers as a non-fungible token (NFT) through the blockchain thereby ensuring that the previously anonymous fraudsters could not escape the consequences of their wrongdoing.
The International Monetary Fund (IMF) warns that early promises that crypto would transform the way finance was delivered by advocates of the crypto market, that many policymakers accepted at face value, now seem quite hollow. Far from transforming the financial markets for the better, the negative impact has caused greater harm. The IMF suggests that policymakers must scrutinise and recognise that the crypto market may not be able to deliver on the early promises. Therefore, robust regulation is required for the crypto market and associated structures such as the blockchain.
The European Supervisory Authorities (EBA, ESMA and EIOPA – the ESAs) have set out a range of steps consumers should take to ensure they make informed decisions. As with other regulatory bodies, they warn that investors should recognise that they may lose all the money that they have invested if they consider the crypto market and that there is next to no recourse should the worst happen.
DemetriBezaintes is an associatebased in the London office within the Financial Services and Crypto Litigation Department. Heis an SRA-regulatedRegistered Foreign Lawyer (RFL)in England & Wales and a qualifiedGreek Lawyer.(dikigoros).
Demetri has a thorough knowledge of investment fraud and fund tracing. He works tenaciously for our clients, advising on cryptocurrency,Forex trading disputes and regulatory investigations. He draws his expertise in investment law from his experience in the banking sector and his studies in banking and financial services regulation. Before joining Giambrone & PartnersDemetri worked at an international bank, where his main focus was the enforcement of freezing orders andthird-partydebt orders.
He approaches cross-border jurisdiction matters with a comprehensive view, based on his knowledge of bothcivil and common law.After qualifying as a lawyer in Greece, he obtained a Graduate Diploma in Law from the University of Westminster.
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