Canada’s IIROC warns of crypto broker eTrade Markets

abdelaziz Fathi

Canada’s mega regulator, the Investment Industry Regulatory Organization (IIROC), today warned Canadian investors not to be fooled by eTrade Markets.

The company has been targeting citizens of Canada’s provinces via commercial ads on classified websites, but eTrade Markets is not allowed to, since it is not registered to trade in or advertise on, securities or exchange contracts in the province.

eTrade Markets falsely claims to be an IIROC-regulated online trading broker and uses IIROC’s and its legitimate dealer members’ information on forms and contracts to entice investors. The company is an offshore, unregulated entity, the regulator said.

Once fraudsters have targeted an investor for one of these crypto scams, they are relentless in their communications. Phone calls start out as friendly and business-like, albeit usually very persistent. Meanwhile, the regulator urges customers concerned about or involved in such transactions, to get in touch.

“Certain crypto-assets have generated a lot of hype. All investors must be informed and ask themselves important questions before purchasing higher-risk investment products that do not trade on stock exchanges. Investors should know that crypto-asset trading platforms are not the same as regulated marketplaces and may be missing key investor protections,” the statement further cautions.

In such circumstances, entities begin to appear using the so-called aggressive marketing (including incomplete or insufficient for risk assessment information), to offer the opportunity to invest in crypto-assets. Locals often lack the knowledge and awareness of the risks associated with such forms of investment, IIROC said.

Additionally, the authority noted the lack of proper regulations in place and that crypto is difficult to understand and convert back to cash. Thus, crypto assets are somewhat murky investments and are difficult to be kept safe, unlike ‎strictly regulated traditional financial markets.

The IIROC also warns of the substantial potential for fraud at this time, saying that crooks often try to capitalize on high-profile news events to lure investors into financial cons.

While IIROC rarely uses its power, but the watchdog intervenes, particularly in situations where no other domestic regulator has the power to act (such as where a firm is proposing to offer a foreign-produced highly-leveraged product to retail clients).

Canada has made localized attempts to regulate specific aspects of cryptocurrencies. While some of those instances are more concerning than others, none of it has officially banned the virtual asset class. Instead, the country has taken a stance similar to other countries to regulate the sector and prevent its use in criminal activities.

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