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Kriptomat Fraud Awareness Note


Kriptomat is committed to fair and transparent business practices. We strive to run the business within the framework of legal regulations and following best practices and personal integrity. We consider all crypto market players to be responsible to act prudently and to help shape a good industry practice that will support the further adoption and growth of the crypto industry which is in line with our vision and mission. When providing services we constantly weigh between fast service delivery and clients’ security.

To manage the risks and reduce fraud-related incidents, as well as to enable controlled fraud combat improvements, we established the Kriptomat Internal Fraud Prevention Program, within which we began to systematically implement various measures in order to further protect, and above all, make customers aware of various types of fraud. 

But regardless of what we do, the actual safety depends on the awareness and due diligence of the client itself. We, therefore, urge our clients to read carefully the questions below, which explain what, why, and how we implement certain measures. In the event that you have been (or suspect that you were targeted as) a victim of fraud, we kindly ask you to contact us at [email protected].

Why do we ask for your documentation and why we may ask you to provide proof of your source of funds?
As a licensed Estonian virtual currency services provider we are considered a financial institution. We are supervised by the Estonian Financial Intelligence Unit (FIU) and we are obliged to follow applicable Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulation. Based on the Estonian Laundering and Terrorist Financing Prevention Act we are obliged to implement several steps through the onboarding of new clients as well to provide on-going active transaction monitoring. And for this reason, you are required to submit your identification documentation after your registration and prior to your first purchase of virtual currency. This is also the reason why once you reach a certain transaction value limit we will ask you about your source of funds; and also why we may check the reason for entering into a business relationship with us. 

We understand that our questions may be perceived as a bit annoying or even intrusive, especially if we require further clarification or evidence, but we operate in a way that fully complies with regulatory requirements and act prudently so that we make our contribution in shaping good industry practice. But hey – you trust us with your money. Is it not great that you know we are regulatory compliant and that we honestly believe in ethical business? For more information regarding the due diligence measures please read our Terms of Service. On top of legislative requirements, we applied several additional security measures as we noticed the need to implement additional security checkpoints with the help of which we are trying to detect fraudulent activity. For more information please read about our Internal Fraud Prevention Program.

What is Kriptomat Internal Fraud Prevention Program?
Probably you have asked yourself why we are so noisy and asking you about who you are talking to on the phone or why you were using headphones while submitting to our KYC. Perhaps we asked you to confirm that you are buying cryptocurrencies for yourself and that you are not cooperating with any brokers or investment advisors or we asked you to disclose the name of the broker. Or perhaps you noticed we are asking you if someone is connected to your computer via a remote application (such as AnyDesk) or perhaps (and hopefully) you noticed our scam alert notification or security warnings in our SMS and emails that our team will never call you. We implemented all these measures (and many others) because we want to protect you and your wealth against extremely skilled fraudsters who are marketing themselves as brokers or investment advisors and that might be promising you to earn a fortune in no time.

In February 2020 we launched an Internal Fraud Prevention Program under the leadership of our Chief Operating & Integrity Officer. With the establishment of the Internal Fraud Prevention Program, we began to systematically collect data on identified cases of fraud. Based on the facts, we implemented additional safety measures and began to monitor their effectiveness. We were very pleased to see the reduction of the fraud cases, however as new cases of fraud are constantly appearing, it is essential that we keep a close eye on new fraud types and always look for new solutions in order to ensure the safety of our customers as much as possible. Therefore, we kindly ask you not to be upset with additional safety and security procedures as fighting against fraud will only be successful if we work together. Our internal risk assessment is fully compliant with the applicable regulation and enhanced with our experience and knowledge, also including information received from our clients regarding fraud cases. So we use the information we receive wisely and with a greater purpose.

Your cooperation and support are much appreciated. In case you have any questions or suggestions regarding fraud protection measures or raising awareness you are most welcome to contact us at [email protected].

Does Kriptomat cooperate with brokers or investment advisors or similar?
No. Kriptomat does not cooperate with brokers or investment advisors nor we provide such services ourselves. Whenever someone tells you we are working with them (or that they are working for us) or implying such a thing, please take this very seriously and consider yourself targeted as a victim of a scam. We do not cooperate with any such company or individual, and we never will. We are an exchange-as-a-service platform and we are here to enable you to buy digital currencies in the most pleasant way possible. But we do not, nor will we, promise you anything else, especially anything connected to “sky is the limit” profits. 

We will also NEVER call you. If Brandon, John, Jessica, etc. are calling you from Kriptomat, it is surely a scam. Please read what to do in such a case under the question “What should you do if you suspect you have been frauded?”.

Are you not sure you can trust your advisor or broker?
Well, you are right! They need to deserve your trust first so we suggest implementing in-depth due diligence. Read about the company, demand information, especially about the licenses, check the founders, check the management, google them, check the public registries, ask about them on forums … 

Digital transactions are as real as if you have gone to the bank with a certain person and then give the money into the hands of that person. Do you know who he is and where he will take the money? If not – then don’t do it. You need to know at all times where your assets are and you need to be in control of them. If you do not understand what digital assets are or how transactions to digital wallets work – then do not let anyone do this instead of you. Learn until you will understand, but do not let third-parties manage your money. Always think about this practically. Remember the bank example. In the end, there is no such thing as getting rich in a few days, so please do not fall for such promises. It breaks our hearts when we hear about cases where people lost all their savings. But there is nothing we can do. Transactions to crypto wallets are final and irreversible. So please be careful and do not trust stories about overnight millionaires.
We strongly suggest you read the article “How to keep your funds safe by never trusting potentially fraudulent investment advisors

Should all brokers be related to fraud?
Absolutely not, and in no way do we wish to imply this; there are many reliable and trustworthy brokers and investment advisors. However, we do not know who you are working with, and since there are so many fraudulent brokers on the market, we feel the need to raise awareness about this topic. Many (licensed) brokers are positively surprised when they see our effort by asking the client about their license. They understand the situation and are happy about our effort by asking the client to re-check their brokers. Brokers who have nothing to hide will gladly disclose all information about themselves. 

In addition, we do not want anyone to feel offended by alerting our users regarding the brokers or investment advisors. However, we can only rely on the information given by our clients. At the end, it is the client’s decision who they wish to work with. However, the clients themselves and solely are responsible for their transactions. Kriptomat will never be responsible for any transactions made by the client. Please see the question “Who is responsible for transactions and possible damage?” for more information.

What will happen if we recognize you are working with brokers or investment advisors?
We will ask you about the broker/investment advisor. In case we will assess that the broker/investment advisor is not trustworthy or even already related to certain fraud cases, we will decline the service. At Kriptomat the integrity takes absolute precedence over profit, so we don’t provide our services if we assess some dubious deals are surrounding the transaction. 

However, even if we provide our service and allow the transaction this cannot be in any way interpreted as our assurance regarding the cooperation with the broker. We take absolutely no responsibility for your cooperation with any brokers or investment advisors or any other third party. We solely grant our absolute one-sided right to decline our services in a case where we assess the circumstances could be interpreted in a way the suspicion of fraud is grounded. Even if we overlook that you cooperate with suspicious brokers we take no liability for that. You alone are responsible for your actions on our Platform.

Who is responsible for transactions and possible damage?
Kriptomat is not responsible for any of our clients’ actions and transactions. All our efforts regarding fraud prevention are strictly an indication of our goodwill. In no way we cannot be held responsible for a client’s actions. Our services are based on a self-service exchange-as-a-platform that requires the client’s initiation and confirmation of each transaction. We do not and can not provide any transaction instead of you or without your explicit order/confirmation. We are not responsible for any of your actions and specifically, we are in no way responsible for your transactions of virtual assets. The transactions of virtual assets are irreversible and final so make sure you put the correct address and that you know to whom you are sending the virtual assets to. All our security measures are considered solely as well-intentioned measures but do not constitute our obligation and, above all, do not shift any responsibility to us, even if we do not perform certain safety measures. In fact implementation of safety measures depend on our internal risk assessment pertaining to certain types of customers and not all control checks are implemented to all our clients.  Please note we will in no way compensate you with the losses that you will incur as a result your cooperation with brokers or investment advisors or similar. As explained we cannot be held responsible and / or   liable for your actions. We will however gladly assist you in any way we can as well as with the police should we be required to.
Which are indicators of suspicious activity or fraud?
Have you been approached by a broker or financial advisor promising you high instant profits? Did they call you so many times and do they sound really nice and they just want you to get wealthy? Did someone from Kriptomat call you and asked about your account credentials? Did someone from Microsoft support call you? Did they advise which exchange to use and are super nicely supporting you through the onboarding process? Is the company established on some island far away? Or no information about the management is available, no license information, perhaps they are calling you from many different numbers or using instant messaging apps such as Viber or WhatsApp? Or perhaps you can find many alerting notes when you google about the broker? They should not be ignored.

Did they offer to remotely connect to your computer and are guiding you on what to do? Did they ask about your bank account credentials, email credentials …? Did they even “warn” you that we might ask about cooperation with the brokers and instruct you to confirm that you are not? There are so many cases of suspicious activity of fraud that we can only list some of them. They do however have some common grounds. Promises of quick and high earnings are one of them, next to persistent contacting and calling. Generally, they are all incredibly friendly and nice, with a great sense of humor even. In some cases they are inducing a sense of insecurity through passive aggression – don’t you want to get rich? Don’t you want to be a millionaire?  In general, the nice part ends up the moment you want your money back and you want to close the brokerage account. Or when they see you have no more money. 

We noticed the following cases of fraud that you should especially pay attention to: Did the broker send you a smaller amount of money (eg. 150 EUR or something like that) to make sure the transaction is working. After that, it is “declared” the system works and you are required to deposit more money? They remotely connect to your computer and provide transactions themselves and you “only” need to confirm the transaction via email and SMS. The virtual assets are then immediately transferred to an external digital wallet address. If you check the address on https://www.blockchain.com/ you can see only a few transactions or that is the new wallet address. Once you wish to close the account and acquire your money back, they refuse and claim you need to pay a certain amount of money to “unlock” the account. Only then will you be able to get your funds or something similar. In such cases, please do not transfer any more money to them even though they might become rude and aggressive. You will not receive it back for sure. 

If you recognized the situations described above you are most likely attacked by the fraudster. Please read “What should you do if you suspect to have been frauded” to decide on your next steps. Regardless of what you decide to do next, we strongly advise you not to give them any more money or digital assets, regardless of how persuasive they sound.

What should you do if you suspect you have been frauded?
If you identify certain suspicious circumstances, we advise you to gather and protect the evidence (email, SMS any kind of documentation that relates to the fraud, phone call details, etc.). Immediately secure your Kriptomat, bank, email, etc. account credentials; if they have been compromised change them immediately. Do not allow any remote connection to your computer. 

We advise you to immediately report the incident to the competent law enforcement authorities as they have sufficient powers to proceed with the investigation and to impose certain legal measures if needed. We also suggest not to warn the suspected fraudsters about the police as they might simply disappear. Also do not warn them about your suspicions so that the police will be able to make contact with them. If the fraudsters will see you are suspicious they will most likely disappear. 

When reporting the incident to the appropriate law enforcement authorities you must describe the incident and surrounding circumstances as fully and comprehensively as possible. And most importantly do not be embarrassed that you succumbed to a fraud. Fraudsters are highly skilled professionals that know how to inspire confidence and gain property in a distinctly cunning way. Only when the incidents are reported to the law enforcement authorities the formal procedures may be initiated and there is a chance that the responsible persons will be brought before justice.  We actively cooperate with law enforcement agencies and assist in investigations to the best of our ability.

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