Cyber criminals face five years in jail and Dh1 million fine over cryptocurrency scams

New legislation will increase punishments for online fraudsters to protect the public

Virtual cryptocurrencies are often exploited by criminals. Photo: Reuters

Cyber criminals promoting cryptocurrency scams online will face five years behind bars and fines of up to Dh1 million under tough new UAE laws introduced to protect the public from financial fraud.

The clampdown was introduced as part of a series of sweeping legal reforms announced by President Sheikh Khalifa last month.

The new legislation broadens the country's current cyber crime laws to cover the advertisement of rogue cryptocurrency schemes which are not recognised by UAE authorities.

“As per article 48, posting misleading ads or inaccurate data online about a certain product will be punishable with jail and/or a fine between Dh20,000 and Dh500,000,” said Dr Hassan Elhais, of Al Rowaad Advocates.

“The same penalty applies to members of the public who promote cryptocurrencies unrecognised by authorities in the country.”

Dr Elhais explained that previous laws banned promoting cryptocurrencies but didn’t penalise it.

Dr Hassan Elhais, of Al Rowaad Advocates, outlined new legislation tackling cyptocurrency scams. Photo: The National

“The amendments introduced punishments against the offence, which is a first for the UAE,” he said.

He said article 41 of the law complements the previous article in order to boost online safety and better protect people from falling victim to financial crimes.

“It imposes a penalty of five years in prison and/or a fine between Dh250,000 and Dh1 million against those who promote electronic currencies or fake companies to raise money from the public without a licence from competent authorities,” he added.

UAE seeks to protect public

Cyber criminals have sought to exploit the growing popularity of cryptocurrencies around the world for their own gain.

Cryptocurrencies are a form of digital money, which does not have a physical form like coins or notes, but is instead virtual.

They can be stored in a digital wallet and, while they can't be held in your hand, they have an allotted value to be used to purchase goods.

Earlier this year, Abu Dhabi Police warned people to beware of fake cryptocurrency schemes promising instant wealth.

The force called on people not to be duped by adverts promising quick and easy financial gains.

Dubai in May also warned about cryptocurrency fraud after false statements linking it to the Dubai Coin were circulated.

In 2018, a Dubai court sentenced two Indian fraudsters, Sydney Lemos and Ryan Fernandez, to more than 500 years in jail each for their role in an elaborate fake currency scheme.

Investigators believe more than 7,000 investors from across the globe were conned out of nearly $500 million (Dh1.8 billion) in the scam by Exential Investments Inc, once based in Dubai Media City.

Cryptocurrency scams have been reported in countries across the world.

Six people were arrested over a €30 million ($36.2m) cryptocurrency scam in May that targeted hundreds of people across Europe.

German police launched an investigation into a gang after citizens reported losses of €7m from the investment fraud.

Cyber law updated

The revised law also sets out punishments of jail time or a fine between Dh50,000 to Dh200,000 or both against offenders who create fake email accounts or website impersonating others.

The penalty increases to two years in prison if the offender used the fake accounts to defame the people they have impersonated.

The UAE is continuing to take action against those circulating fake news by using so-called 'bots' to spread misinformation.

“Article 54 states that using or modifying electronic robots to share, re-share or circulate fake news in the country can be subject to a prison term of two years or a fine not less than Dh100,000 and up to Dh1 million, or both,” said Dr Elhais.