Business & Finance

Crypto Fraud Exposed: Millions of Users Saved From BitPay’s Duplicate

The crypto ecosystem, despite offering tons of benefits to the traditional financial world does not come without its downsides, which include incidents of cryptojacking, hacks and other fraudulent activities. Recently, the cryptocurrency payment service provider BitPay found itself in the middle of a debacle pertaining to fraud.

According to reports, Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier (CSSF), red-flagged all activities of a fraudulent copycat website that happens to be impersonating the United States-based firm BitPay.

Headquartered in Atlanta Georgia, BitPay is a payment processor for Bitcoin (BTC) and Bitcoin Cash (BCH), though only recently the firm extended its services to include Ethereum (ETH) in its system. According to the platform’s website, BitPay is the largest bitcoin payment processor in the world, serving industry-leading merchants on 6 continents.

On September 18, the CSSF issued a notice in order to warn the public regarding the activities of a fraudulent clone company that is going by the name Bitbay Europe S.A. The announcement explains that Bitbay claims to be a payment institution authorized in Luxembourg and supervised by the CSSF, located at 14 rue Erasme, L-1468 Luxembourg.

However, the regulatory authority clearly denies any acknowledgement of such a platform. The warning read:

The CSSF informs the public that an entity named bit-bay EUROPE S.A. is unknown to it and that it has not been granted any authorization to provide payment services in or from Luxembourg.

The real BitPay, unlike the imposter Bitbay, is a coveted firm that holds a virtual currency license authorized by the New York State Department of Financial Services (NYDFS), as per reports. The said license allows the company to offer their clearing and settlement services to merchants who are looking to accept cryptos in payment or who are willing to issue crypto payments.

READ ALSO: This Crypto Startup Made a Cold Wallet With Direct Blockchain Access

However despite having the authentic license in hand, BitPay took the drastic step of suspending its operations in Germany, which neighbors the small European country of Luxembourg. Reports suggest this step back was due to the newly introduced regulations in the country that are to take effect next year. Under the forthcoming regulations, crypto businesses will be required to obtain a license particularly issued by the German regulators.

Germany has publicly stated that they want crypto companies to apply for a license starting in 2020. We have paused operations in Germany while we evaluate the need for German licenses.

Europe has been in the news for gradually tightening the rules for the budding crypto space. The crypto ecosystem in Europe is being drowned in a wave of new regulations that set rigid requirements for companies operating in the industry and social media giant Facebook’s forthcoming cryptocurrency, Libra.

Reports suggest, Europe has arrived at this point due to the obligation of member states to transpose EU’s Fifth Anti-Money Laundering Directive (AMLD5) into national law by January. And Luxemburg’s financial market has had to adopt European restrictions around retail trading products, including cryptocurrency byproducts.

READ ALSO: Crypto Survey: 41% Europeans are Counting on Bitcoin and Cryptos

While Europe has increased security measures, so has the original BitPay platform. Only last month, the crypto payment processor rolled out its new identity verification measures for certain high-value payments, refunds and payouts.

With BitPay’s newest feature, users are required to go through a verification process, which is only a one-time thing but requires information like Social Security or passport number, as well as a photo ID. Despite the fact that this applies to certain cases involving a hefty sum of virtual money, many in the crypto community did not receive the feature well.

The crypto community, in general, is awry and skeptical when it comes to providing their personal and sensitive data to a firm that will end up being stored in centralized troves. One of the defining features of the new crypto and blockchain tech, decentralization, is lost in privacy policies as introduced by BitPay.

Now however, considering the clone website that is operating under the authorization of some pretense license issued by the CSSF, there is a thin chance that people might reconsider the elaborate new identity verification measures by BitPay.

For now there haven’t been any reports about missing or misplaced crypto assets by Bitbay, but the website is still a glaring red flag and its better to simply avoid it, for the sake of ones digital assets.

READ ALSO: SEC Chairman: ‘No Bitcoin Trading Without Proper Crypto Regulations’

Abeer Anwaar

Abeer holds a Bachelors degree in Media studies and covers blockchain startups for BlockPublisher. An optimist, excels in the art of the written word and swears by the joy of all things sweet. Contact the editor at

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