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Promoters of fraudulent cryptocurrency schemes will face up to five years in prison and over £200k fines in the United Arab Emirates (UAE).
The new measures are set to take effect on January 2 next year as part of the country’s new online security laws.
They are a part of sweeping legal reforms introduced by the country’s president, Sheikh Khalifa, in November.
The UAE says the laws are intended to protect internet users from electronic fraud and to preserve personal privacy and rights, The National reported.
Presently, there is no rule against crypto assets in the UAE, but it is regulated by the country’s Securities and Commodities Authority (SCA).
The UAE has previously prohibited the promotion of cryptocurrencies but lacked provisions enabling authorities to penalise any such offenders.
‘Posting misleading ads or inaccurate data online about a certain product will be punishable with jail and/or a fine between £4,058 and £101,442,’ legal expert Dr Hassan Elhais, of Al Rowaad Advocates, told the website.
The UAE is also taking action against those circulating fake news by ‘bots’ to spread misinformation.
‘Article 54 states that using or modifying electronic robots to share, re-share or circulate fake news in the country can be subject to a prison term of two years or a fine not less than £2026 and up to £200k, or both,’ said Dr Elhais.
Various UAE authorities have previously raised concerns about fraud related to crypto-asset transactions as fake cryptocurrency schemes become a growing problem. The country’s law enforcement has also warned residents to be wary of fake cryptocurrency schemes that promise instant wealth.
The tightening regulations follow a rise in the number of fraudulent cryptocurrency schemes. In May 2021, the government was forced to release a statement disassociating itself from ‘Dubai Coin’.
‘The website promoting the coin is an elaborate phishing campaign that is designed to steal personal information from its visitors,’ said the tweet.
Cryptocurrency scams have reportedly cost investors over £5.7 billion this year alone reaching a record high of 81%.
The latest figures showed people in Dubai alone lost around 80 million DH (£16 million) to crypto scams in just the first half of 2021.
This prompted police to issue warnings to residents about fake trading and profit-making schemes related to cryptocurrencies.
In July, nine men were jailed for 10 years after duping victims out of £3 million through a get-rich-quick cryptocurrency trading scam.
Earlier this month, the Dubai World Trade Center was declared to be both a comprehensive crypto zone and regulator, which will allow it to design an extensive hub for the progression of the sector.
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