Regulator cannot get info from Dutch Crypto Mining, imposes penalty

The Dutch Authority for the Financial Markets (AFM) is having trouble communicating with a crypto firm. Today, the regulator announced that it had issued a Cease & Desist order against Dutch Crypto Mining B.V. (DCM) because the firm has not complied with information requests from the AFM. That is why, the regulator is unable to determine whether the law is violated.

The AFM explains that DCM offers investments services related to the mining of cryptos through the website www.dutchcryptomining.nl. The AFM suspects that DCM may offer or have offered securities to the public as an investment institution. According to the Financial Supervision Act, this is not permitted without a prospectus approved by the AFM or a permission issued by the AFM. The AFM has requested information about the activities of DCM, so that it can determine whether the company has met these obligations.

DCM did not provide the requested information within the set term. Since October 5, 2018 DCM has been obliged to pay a fine. The monetary penalty payment reached the maximum amount of € 50,000 on October 15, 2018. To date, the AFM has not yet received the information. Meanwhile, it appears that DCM was declared bankrupt on October 23, 2018.

Let’s recall that, early this year, the Dutch Financial Stability Committee (FSC), which consists of representatives of the Dutch central bank DNB, the financial markets regulator AFM and the Ministry of Finance, said that cryptocurrencies themselves do not pose risks to the financial stability of the Netherlands.

However, the Committee warned consumers and financial companies explicitly about the risks of cryptos and the so-called Initial Coin Offerings (ICOs), as investors are not protected by regulation when they hold or trade cryptocurrencies. In addition, financial institutions face integrity risks because the identity of buyers and sellers can not be known or is insufficiently known.