Supervisory authority BaFin warns against dubious providers and questionable financial products


We are increasingly receiving inquiries from private investors who have made payments via online platforms for the alleged acquisition of crypto currencies or fictitious financial products. Fantasy product names tempt unsuspecting and gullible consumers to supposedly reach for the big money. Advertised with immense returns, the fantasy products in part however simply do not exist.

For the provision of financial services, the creators of such websites claim to have the necessary license in for example Switzerland or Austria or Hong Kong.

In Germany, as of January 1st, 2020, a license as a financial services institution in accordance with § 32 KWG is required for anyone who offers the safekeeping, management and security of third-party crypto assets or private cryptographic keys that are suitable for holding, storing, or transferring crypto values. Dubious providers are aware of this and are trying to cash in quickly in German-speaking countries.

It is doubtful whether victims of such suspicious platforms and providers of dubious financial products can enforce lawful repayment claims of their unsuspectingly invested capital against those responsible without legal representation.

Anyone who intends to invest in a financial product with an enticing or snappy-sounding name of a seemingly modern "financial service provider" should first obtain information about the company from the competent supervisory authority in the respective country or a lawyer in order not to fall victim to fraudsters. The supervisory authorities in Europe all have customer hotlines for this purpose. Also, the investor must remember that returns are always correlated to a risk of loss. Under no circumstances should an investor be persuaded by the psychologically trained sales staff, for example, to take out a bank loan to invest in a questionable product.

The German banking supervisory authority BaFin regularly publishes information on dubious financial service providers and questionable financial products on its website:


The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Benjamin Hasan, Partner at the Frankfurt office, via telephone at +49 69 247 428 444 or by email at benjamin.hasan@kyprianou.com