The Swiss Financial Market Supervisory Authority FINMA has shut down providers of what it has dubbed a ‘fake cryptocurrency’ called E-Coin.
The financial regulator targeted the Quid Pro Quo Association, Digital Trading AG and Macelo Group AG, who it alleges were all involved in sales of the fake cryptocurrency.
The companies had been operating with the required authorisation.
In a statement on its website, FINMA states:
“For over a year since 2016, the QUID PRO QUO Association had been issuing so-called “E-Coins”, a fake cryptocurrency developed by the association itself.
“Via this platform, these three legal entities accepted funds amounting to at least four million Swiss francs from several hundred users and operated virtual accounts for them in both legal tender and E-Coins. This activity is similar to the deposit-taking business of a bank and is illegal unless the company in question holds the relevant financial market licence.”
This statement shows that E-Coin was not functioning like other cryptocurrencies. Instead of being decentralised, the currency was under the complete control of the companies selling them. The currency was not stored using blockchain tech, but was instead stored locally on Quid Pro Quo’s servers.
FINMA has only been able to recover half of the $4.2 million made through the sale of E-Coins.
In its statement, the regulator highlights three other cryptocurrency-related companies that have aroused its suspicions: Suisse Finance GmbH in Liquidation, Euro Solution GmbH, and Animax United LP.
Swisscom sets up blockchain unit
Rueters is reporting that Swisscom, a Swiss government-owned telecommunications provider, is establishing a blockchain unit that will look to develop applications aimed at providing solutions for enabling off-exchange trading.
Swisscom will hold a 70% stake in Swisscom Blockchain Ltd. The remaining 30% will be held by the other founding partners. The unit will be headed up by Daniel Haudenschild, who moves from EY.
Swisscom CEO Urs Schaeppi said:
“Blockchain technology has the potential to revolutionise business models and ecosystems in almost all sectors by providing secure connections between all participants. And this is ingrained in Swisscom’s DNA: securely connecting people, organisations and objects with highly available infrastructure.”
Among the new unit’s activities will be to support ICOs as an alternative source of finance for projects and companies. The company thinks that it ‘is in a position to make an important contribution to the secure settlement of transactions’.