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KEY POINTS:
- The Central Bank of Somaliland has issued a warning about nine fraudulent cryptocurrency apps: 2139, KUEX, CBEX, TRECART, KFC, ADIDAS, CROPTY, OKX, and MARAI.
- Deputy Governor Abdirahman Mohamed Abdillahi revealed these apps are involved in pyramid schemes and other illicit activities.
- These platforms do not comply with local financial regulations and pose significant risks to users’ funds.
- The public is urged to avoid these apps to prevent financial losses.
- This warning follows a similar incident in 2020 with fake Forex trading schemes.
- The Central Bank promises strict legal action against promoters of these scams and encourages citizens to report suspicious activities and verify investment opportunities through official channels.
Hargeisa, Somaliland, July 11, 2024 – The Central Bank of Somaliland has issued a critical warning about a series of fraudulent cryptocurrency applications threatening the nation’s financial security. Deputy Governor Abdirahman Mohamed Abdillahi revealed nine apps engaged in elaborate Ponzi schemes, exploiting the growing interest in digital currencies.
The identified fraudulent apps are:
- 2139
- KUEX
- CBEX
- TRECART
- KFC
- ADIDAS
- CROPTY
- OKX
- MARAI
These apps operate by promising unrealistic returns, sometimes as high as 1-2% daily or 30-50% monthly. They feature sophisticated-looking trading interfaces that mimic legitimate cryptocurrency platforms, complete with seemingly real-time market data. To build trust, these schemes often provide small initial returns to early investors, using funds from new participants to pay out these “profits.”
A key feature of these scams is their aggressive referral programs, which encourage users to bring in new investors for additional bonuses. This pyramid-like structure helps the scheme spread rapidly through communities.
“These applications do not comply with our financial regulations and pose significant risks to our citizens’ funds,” Abdillahi stated. He emphasized that the difficulty in withdrawing large amounts is a red flag, often preceding the sudden disappearance of the app and its creators – along with all invested funds.
The use of cryptocurrencies in these schemes makes it particularly challenging for authorities to trace funds or apprehend the perpetrators, especially across borders. Social media platforms have become breeding grounds for promoting these scams, with fake testimonials and fabricated success stories luring in unsuspecting investors.
This crisis echoes a similar incident in March 2020, where Somaliland faced sophisticated Forex trading scams. The recurrence of such frauds highlights the ongoing challenge of protecting citizens in the rapidly evolving digital financial landscape.
The Central Bank has promised stringent legal action against anyone involved in promoting or facilitating these schemes. However, the borderless nature of cryptocurrency transactions complicates enforcement efforts.
As Somaliland grapples with this threat, authorities urge citizens to exercise extreme caution, verify the legitimacy of investment opportunities, and report any suspicious financial activities. The Central Bank emphasized that participating in these schemes could result in substantial financial losses, potentially destabilizing the nation’s economy.
This developing situation serves as a stark reminder of the risks inherent in unregulated digital financial services, even as cryptocurrencies continue to gain traction worldwide. The coming weeks will be crucial as Somaliland works to contain the spread of these fraudulent apps and mitigate their impact on the nation’s financial stability.