Rs11.7 Million Lost in Latest Cryptocurrency Scam: How to Authenticate?

The cryptocurrency sector is a labyrinthine and volatile realm, underscoring the pressing need for financial education. A staggering Rs 11.7 million has vanished through the obscure application Zoiper, a scam that starkly illuminates the pitfalls of cryptocurrencies and the urgent necessity for investors to exercise unprecedented vigilance.

An audacious fraud amounting to Rs 11.7 million, an unfamiliar application named Zoiper, and a meticulously crafted system designed to ensnare unsuspecting investors—this recent scandal, which ensnared a French national, brought to the forefront the critical issue of investment security in cryptocurrencies within Mauritius.

This incident serves as a poignant reminder of a reality often underestimated: in the digital asset universe, vigilance is not merely advisable; it is a vital necessity.

Me Arvin Halkhoree, a specialist lawyer, offers his sage advice on how to evade the increasingly sophisticated traps set by fraudsters.

“Before investing, it is imperative to verify that the platform is registered with the Financial Services Commission (FSC).

This information is readily available on their website,” Halkhoree asserted.

Such preliminary checks can effectively eliminate unregulated platforms operating outside the legal framework of Mauritius.

The lawyer further advised investors to be attentive to several indicators of legitimacy:

Transparency regarding the identities of the executives, the existence of clear terms of use, and publicly accessible security policies.

These elements form an essential first filter to distinguish reliable operators from dubious ones.

Me Halkhoree also highlighted red flags that should immediately raise suspicions:

“Promises of guaranteed returns, urgent solicitations to invest, or ambiguity surrounding the withdrawal of funds are all warning signs. One must avoid such offers at all costs.”

These alluring promises, often too good to be true, frequently conceal fraudulent mechanisms targeting the ill-informed investor.

In a sector as intricate and volatile as cryptocurrencies, financial education becomes an absolute necessity.

“Investors must comprehend what they are engaging in, recognise the signs of fraud, and, above all, maintain a critical mindset towards overly enticing offers,” the lawyer insisted.

He systematically recommends taking the time to conduct thorough research, verifying the provider’s licence, and, in cases of doubt, consulting a lawyer or financial advisor.

“Vigilance remains the best protection,” he emphasised, underscoring that this precaution is well worth the time invested, especially when considering the substantial sums at stake.

The Limitations of the Regulatory Framework

While Mauritius has established a legal framework with the Virtual Asset and Initial Token Offering Services Act 2021 (VAITOS), it still harbours certain limitations that investors must bear in mind.

This legislation, enacted to align local laws with the standards of the Financial Action Task Force (FATF), aims to legally regulate services related to cryptocurrencies.

“It imposes strict compliance, transparency, governance, and anti-money laundering obligations on Virtual Asset Service Providers (VASP),” clarified Me Halkhoree.

Among these obligations are registration with the FSC, implementation of Know Your Customer (KYC) procedures, and the adoption of robust cybersecurity measures.

However, the protection afforded to investors remains limited on several fronts. “The VAITOS does not guarantee investments. The risk lies entirely with the investor,” the lawyer pointed out.

He also added that “there is currently no mandatory guarantee fund for investors in Mauritius.”

Although certain obligations, such as the segregation of client funds, provide a minimal level of security, they do not shield against market fluctuations or insolvencies.

The FSC may revoke a VASP’s licence in cases of serious misconduct, but this does not automatically entail compensation for affected investors.

What to Do in the Event of Fraud?

If, despite all precautions, an investor falls victim to a scam, Me Halkhoree recommends a rigorous approach.

“The first step is to file a complaint with the police. It is also essential to inform the FSC if the fraudster posed as a regulated provider,” he explained.

Should the perpetrator be identified, civil action may be pursued.

However, the lawyer tempers expectations regarding the recovery of funds: “Digital assets can swiftly change hands, be converted, or transferred to anonymous wallets, complicating recovery efforts significantly.”

Moreover, the often cross-border nature of these frauds adds another layer of complexity. “International judicial assistance may be required, which can be time-consuming and may even fail if the funds are hidden abroad,” lamented the expert.

Tax Implications in Mauritius: A Crucial Insight for Investors

In the realm of taxation, Mauritius presents a unique landscape that investors must navigate with care.

“Mauritius does not impose capital gains tax on individuals. Consequently, profits from one-off transactions are generally exempt from taxation,” explained Me Halkhoree, shedding light on the favourable fiscal environment.

However, this advantageous tax regime shifts dramatically when trading transforms into a regular activity.

In such instances, earnings may be reclassified as commercial income, thus becoming subject to taxation.

“This reclassification hinges on several criteria: the frequency of transactions, the duration of asset holding, and the organisational structure in place, among others,” the lawyer elaborated.

For businesses, the rules are more straightforward: income derived from cryptocurrency is incorporated into the calculation of taxable profits according to conventional corporate tax regulations.

The recent fraud involving Rs 11.7 million through Zoiper serves as a stark warning: in the still nascent and volatile world of cryptocurrencies, caution and informed decision-making are the best allies for investors.

In Mauritius, as elsewhere, the legal framework is evolving to bolster consumer protection, yet personal vigilance remains irreplaceable in the face of the inherent risks associated with these burgeoning financial markets.

Source: Defi Media