Using unlicensed platforms and ecosystems is a very risky proposition for traders and investors of all locations, and should be avoided at all costs. There must be one or several reasons behind the fact that they have not sought or received an official license to perform their operations in a specific country.
Financial regulators of nations in which these platforms perform their operations are constantly looking to let the public know about the risks of doing business with them and let alone investing valuable resources. Such is the case of Germany, which has warned people through the Federal Financial Supervisory Authority (BaFin) about crypto exchange CoinBene.
Recruiting Freelancers and Paying them on Commission
The financial regulatory organization of the mentioned nation issued an official warning this week, specifically stating that the project in question, named CoinBene, is currently recruiting freelance crypto traders and they will, allegedly, get paid on commission, which sounds bad enough to begin with.
According to BaFin, crypto assets are recognized in Germany as financial instruments, and engaging into trading operations requires due authorization under the respective organism, in this case, Germany’s Banking Act, or Kreditwesengesetz (KWG).
In the same vein, BaFin clearly states that CoinBene is not a legitimate project because it is not listed in the country’s commercial register, whilst also failing to secure the proper licensure for trading these assets as the KWG requires. People using its services and products are, therefore, setting themselves for augmented risk and, ultimately, disappointment.
Denying the Claims
On the other hand, the company has answered inquiries in pat days when it comes to its presence in the European nation. To that effect, it has used its official Twitter account to completely deny that it is recruiting freelancers.
“We received numerous inquiries regarding our alleged hiring in Germany. But CoinBene is not planning to open any office nor hiring any representative in Germany. Nonetheless, we would like to thank those who actively reached out to us for your concern and understanding,” the project wrote on the microblogging site.
People in the industry suspect that CoinBene is being used to cover up a hack, and, of course, the crypto exchange has adamantly denied those accusations by saying that the flow of outgoing resources was due to ongoing and continuous maintenance.
A Top-10 Crypto Exchange
At the moment of writing this piece, CoinBene was comfortably in the top 10 in the ranking of crypto exchanges by adjusted trade volume, checking in at the eighth spot, according to the data center of CoinMarketCap. The firm’s trade volume is approximately $1.63 billion, which is fairly significant.
Analysts at Elementus, a blockchain infrastructure company, revealed that whilst findings of an investigation were not enough to refure CoinBene’s claims, by examining the outgoing transactions, they could see details that were also common in a hack.
The current CEO of HowDoo, David Brierley, says that he lost roughly $209,000 (approximately 18.4 million uDOO) in the process, and is looking to file a suit against the exchange in question.
By Andres Chavez