KNF Warns Polish Consumers Engaging in High-Risk Investment Platforms

On December 3, the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego, KNF) published a report regarding the rapid growth and use of investment platforms that bridge consumers and financial entities, a trend that the regulator expects to accelerate in line with the wider trend towards digitalization of the EU financial sector. The report stated that investors are increasingly vulnerable to losing their money on high-risk transactions, such as cryptocurrency and foreign exchanges. Data from the KNF disclosed that consumers investing in high-risk assets are potentially prompted by increasingly accessible offers being provided by new investment apps.

The watchdog is concerned that several offers have recently appeared on the internet that encourage local consumers to invest in investment platforms that promise fast, reliable and high profits to the customers. The investments involve the purchase of popular cryptocurrencies or shares of well-known companies.

Therefore, the KNF advises consumers to approach such kinds of proposals with great distrust and warn them to verify information regarding extremely attractive offers being proposed by certain financial firms.

The watchdog reveals that fraudsters often approach potential victims directly by phone or through their email contact details. Thus, the agency advises consumers to be diligent with regards to the safety of their contact details. In addition, the regulator disclosed that fraudsters reach victims through several advertisements of dishonest investment platforms that often use images of famous people convincing them about high investment profits.

The KNF reminds consumers that dishonest platforms are often registered in exotic countries, the so-called tax havens, and it admitted establishing supervision over such platforms is very difficult. Therefore, the agency recommends using increased vigilance, limited trust and conducting a thorough examination to ascertain that the offers that firms are providing are credible. “In many cases, recovering lost money is highly complex, time-consuming or even impossible,” the regulator said.

“If a customer suspects that they have been cheated, please gather the details of the time of the event, the form of contact with fraudsters, telephone numbers, email addresses, bank account numbers to which funds were transferred, data of recipients of such funds or addresses of cryptocurrency wallets (in case of when scammers demanded a cash exchange for cryptocurrencies). Then please go to the nearest police or prosecutor’s office and report the suspicion of the crime there,” the agency elaborated.

Enhancing Portfolio Performance

While stocks and cryptocurrencies have become popular, investors need to know exactly what they are investing in. It is important to weigh the risks and rewards of investing, and what will drive the investment’s success. If they do not have such kind of information, then they cannot make the calculation. And, in this case, it is not really investing, it is much more like gambling. As many investors are thinking about constructing their portfolios, they often contemplate about making an either-or choice between cryptocurrency and stocks. But, this does not have to be hard, as it is all about weighting their portfolio in a manner that fits their risks and needs. If investors decide to invest in crypto or stocks or both, they should consider how it fits with their own risk tolerance and financial needs.