The launch of a digital currency that could purportedly be used to buy goods online and in-store is a scam, Dubai's government said.
Dubai Coin – a cryptocurrency used for a trial in 2017 and later shelved – was "relaunched" this week amid claims it had official backing.
Its value rose 14-fold from below $0.09 per coin on Tuesday to $1.13 as of 6.45pm UAE time on Thursday, as investors snapped it up.
But the relaunch was a scam with no official backing, Dubai Government Media Office said on Thursday night.
"Dubai Coin cryptocurrency was never approved by any official authority," it said.
"The website promoting the coin is an elaborate phishing campaign that is designed to steal personal information from its visitors."
It is not clear who is behind the scam.
ArabianChain Technology, a UAE-based blockchain start-up that set up Dubai Coin in 2017, said the relaunch was fake and that its name and logo had been used fraudulently in a news release and website.
The company, which owns the Palmex cryptocurrency exchange, shelved Dubai Coin in 2019 to concentrate on Palmex, it said in a previous blog post.
“We haven't made such an announcement, please be cautious,” the company said on Twitter.
It also described a website offering the coins for sale as a "scam".
The website, which featured ArabianChain's logo, was purportedly being run by a company calling itself Dubpay International, but contained no contact details and is no longer operational.
ArabianChain did not respond to further requests for comment.
'Pump and dump schemes'
Although Dubai Coin was effectively shelved, it still exists and can be mined. Such coins can be used by people for nefarious purposes, such as "pump and dump" schemes.
The people behind the ploy buy coins when the price is low, then convince others to join them, causing the price to inflate. This happened with Dubai Coin this week, when a news release was sent out and picked up by a local PR newswire.
The people running the scheme then sell out before the price begins to tank. The buyers who are not in on the game are left with virtually worthless assets.
There are more than 4.26 million Dubai Coins in circulation, meaning it has a market capitalisation of $4.84 million, according to Crypto.com.
The Central Bank of the UAE did not respond to requests for comment, but it has previously issued guidance stating that it "is not presently accepting (or acknowledging) crypto-assets or virtual assets as a legal tender in the UAE".
"The only legal tender in the UAE is the UAE dirham," the regulator said in December.
"Since 2017, crypto scammers are coming up with such illegal tactics at least twice a year … they use the names of Dubai, Abu Dhabi royal family or Saudi royal family, saying that they are issuing digital assets backed by oil and gold," Irina Heaver, a technology lawyer and cryptocurrency enthusiast in Switzerland, told The National.
"People need to be very diligent. First, never invest your hard-earned money based on website news or tweets. Second, do your own research and always avoid random portals that could just come and go overnight."