AFM sounds the alarm: Illegal crypto exchanges attract Dutch investors

The Netherlands Authority for the Financial Markets (AFM) has been in conflict for years with crypto exchanges that are involved in the Dutch market, but do not have the correct permits. Despite earlier warnings from the AFM, it is estimated that thousands of Dutch people already use the platforms. Resulting in major risks of losing their capital.

Increasingly active without a permit

Crypto exchanges such as MEXC, BitMEX and Toobit are trying to attract more and more Dutch people to their platforms without the necessary permits. In September last year, the financial watchdog warned about Mexc, but that seems to have had little effect.

Since then, these platforms have launched many new products, such as Bitcoin loans, commission-free trading and futures contracts for shares. In addition, new users could receive up to 600 percent interest on their deposit. Toobit is also trying to lure Dutch people with bonuses of up to $5,000 for new customers. A dangerous development according to the AFM.

Speculative crypto futures biggest danger

By far MEXC’s most popular product are speculative crypto futures. Customers can use levers here up to 500 times. This means that the bet can yield a quick return, but it can also lose everything in one fell swoop if the price moves in the wrong direction by 0.2 percent.

According to the AFM, many investors go wrong with these products. Precise figures for the crypto market are not known, but research by the watchdog previously showed that three-quarters of investors ended up with a loss with comparable products.

Fines are difficult to impose

Fines for the platforms do not appear to be an option at the moment. This is only possible after a solid file has been built up, including several warnings. A process can easily take years.

However, these types of platforms have already received fines from other countries. Last year, BitMEX received a $100 million sanction in the United States due to inadequate money laundering controls.

It is difficult to catch these companies, as they have established themselves in places that are particularly favorable to them. For example, BitMEX and Toobit are officially located in the tax haven, the Seychelles. MEXC used to have its seat there too, but no longer. It is unknown where they have settled now.