German financial watchdog declares CoinBene’s hiring illegal

Germany’s financial services watchdog has issued a warning indicating that CoinBene’s latest wave of activities in the country go against the law. The Federal Financial Supervisory Authority (BaFin) accused the Singaporean exchange of hiring freelance cryptocurrency traders in the country to trade cryptos on behalf of its users.

The freelancers allegedly get paid in commission for their work. Such an activity goes against the country’s Banking Act, known in German as the Kreditwesengesetz (KWG). Part of the warning read:

“The freelancer should provide his or her own bank account and perform trades prescribed by the company through cryptocurrency trading platforms. Cryptocurrencies are usually financial instruments. Trading in financial instruments on behalf of customers is subject to authorization under the KWG.”

The regulator also pointed out that the freelancers stand a big risk of engaging in fraudulent acts, stating, “they run the risk of being hired solely for the purpose of quickly transferring illegally obtained funds to foreign criminals through exchange in cryptocurrencies in order to blur their transfer channels.”

Furthermore, BaFin stated that CoinBene doesn’t have the necessary license to operate in the country and is not listed in Germany’s commercial register.

However, the exchange has denied such claims. In a Twitter post, CoinBene stated:

“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.”

This isn’t the first time that the exchange has found itself in controversy. Ever since it rose to prominence in June 2018 by implementing a new fee model, there have been questions regarding its trading volume. At press time, the exchange was the tenth largest globally, having seen $1.5 billion in trading volume in the past 24 hours.

CoinBene was one of the exchanges accused by The Block of faking up to 86% of its volume. The outlet conducted the study based on the ratio of trading volume to website visits. The exchanges that were alleged to have the highest fake volume included CoinBene, Bibox, BitMart, BitForex, Bithumb, Coineal and CoinTiger. Luno, KuCoin and CEX.IO were among those found to least likely be involved in the faking of trading volume.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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