Alleged Philippine Cryptocurrency Scam Raided - 277 Arrested

A report emanating out of the Philippines has alleged that the offices of a suspected cryptocurrency? scam have been raided. The scam is reported to have been targeting investors in China after a tip off came from the Chinese government. 

It appears as if this latest raid is just the tip of the iceberg and that there could be a burgeoning network of scamming developing in the Philippines. Officials from the island nation arrested 277 Chinese nationals during a raid in Pasig City on suspicion of using cryptocurrency? operations to dupe unsuspecting would-be investors back in China.

The raid was conducted on the offices of Grapefruit Services Inc. in Pasig City early last week. The company was operating under a special license from the Cagayan Economic Zone Authority (CEZA). 

This government-owned corporation (CEZA) oversees the Cagayan Special Economic Zone and Freeport, which is a special economic area in the north of the country. Its aims are to attract foreign and local investment. Part of that saw the he Philippine government began allowing cryptocurrency? firms to operate there in April 2018. 

However, it appears as if the firm was operating outside of the designated zone, and thus had broken the contract of the Philippine financial regulations.

Philippines trying to work with cryptocurrencies.

The philippines has been walking a tight line to try and encourage cryptocurrency? investment in the country, while also maintaining safety and security around these digital tokens. Part of the protection comes from the Philippines SEC stepping in and claiming jurisdiction. 

However, it has been an up and down affair as, at the beginning of this year, their Securities and Exchange? Commission (PSEC) postponed sending out the final regulations for ICOs, having introduced a draft version in August 2018.

Although, it is clear from the draft the stane the PSEC takes as it states that tokens issued in an ICO should be classified as securities, and “therefore, these should be registered with the Commission and necessary disclosures need to be made for the protection of the investing public.”

Yet, CEZA has been driving to be the countries country’s cryptocurrency? hub to recover the revenue stream it had lost when predecessors of what are now called Philippine offshore gaming operators (Pogos) were legalized following their accreditation by the Philippine Amusement and Gaming Corp. in 2016.

Last year, CEZA Administrator and CEO Raul Lambino said the agency earned more than P200 million ($3.8 million) from licensing fees of offshore financial technology firms in the first half of 2018.

Kinks to iron out

However, with this regulatory grey area currently hovering around the country, while parts of it are pushing to embrace the technology and the money that comes with it, there appears to be some issues that need to be solved. 

The instance of this alleged Chinese scam sits outside the regulations in place at the moment from the Philippines, and this has led to them being raided by police, as well as shut down and arrested in many respects. However, there could be concerns that more legitimate businesses might suffer an undue fate due to the ambiguous nature of the regulations currently in play.