Canadian Provincial Regulator Exposes HYIP Crypto Scam

Canadian regulators have been vigilant following the collapse of a Toronto hedge fund that promoted a $106 million ICO.

The Manitoba Securities Commission (MSC), a Canadian provincial regulator, has warned the public against investing with two affiliated cryptocurrency firms operating in Switzerland and Denmark.

This time, the firms under the spotlight of MSC called Jbcapitals and Halifax & Associates, which offer clients a range of financial services. A senior investigator with the MSC explains that the regulator received complaints from Manitobans targeted by Jbcapitals, and his investigation turned up numerous inconsistencies.

Both firms’ offerings raise a number of red flags characteristic of investment scams. Specifically, they claim to invest in Bitcoin/cryptocurrency markets on behalf of their clients with an “85% success rate,” adding that their profits will be quickly realized with no risk. These claims carry the hallmarks of investment fraud. They also claim they’ve been in business for a while, but some investigative work on the regulator’s side suggests they’ve been around less than one year.

Canada brings crypto under securities laws

Canadian regulators have been vigilant recently following the collapse of the Toronto-based hedge fund that promoted Blockchain Terminal (BCT) initial coin offering (ICO).

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The most controversial defendant is Boaz Manor, a convicted Canadian hedge fund fraudster who served jail time. In 2012, Manor accepted a lifetime ban on operating within the securities industry following his conviction in the $106 million scam. He was sentenced to four years in prison.

Arguably one of the most audacious ICO scams in recent years, Boaz claimed that he onboarded 20 hedge funds to test out his professional trading service. In fact, he’s never seen the product in action, even though it sent a prototype to a dozen funds, but none of them used or paid for it.

On the trading front, the chief regulatory body in Canada has proposed a regulatory framework that provides clarity for derivatives activities, including cryptocurrency, forex, and CFDs products. Among other things, all highly leveraged products offered to retail clients must be approved in advance by IIROC. Brokers must obtain prior approval for their leveraged products either when releasing new instruments or introducing any changes to the current offerings.

The regulator also said its updated rules would ‘harmonize’ IIROC requirements with product approval requirements introduced in Europe by ESMA, which banned offering binary options and restricted leverage on CFDs.

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