Estonia E-residence Has Facilitated “Large Scale” Crypto Scams

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  • Police in Estonia have identified a “considerable connection” between the country’s e-residence program and cryptocurrency scams
  • E-residents are continuing to use the country as a virtual base for illegal operations including “a few large-scale exit scams”
  • Estonia is trying to recover from the Danske Bank scandal in 2018

Estonia has been further linked to cryptocurrency frauds through its controversial e-residence program, three months after it was revealed that hundreds of crypto license-holding companies were using the country as a base to conduct illegal operations. A Bloomberg report shines a harsher light on the practices that have been adopted by criminal gangs since the e-residence program came into being in 2014, with registrants continuing to conduct scams outside the country.

E-residence Citizens Still Conducting Crypto Scams

In its story, Bloomberg cites a recent report by the Estonian police’s Financial Intelligence Unit which highlights the various scams being carried out abroad by those holding e-residence citizenship. These include cryptocurrency investment scams where victims suddenly find themselves unable to withdraw their funds, “suspicious initial coin offerings” which often see the raised funds being misappropriated, and “a few large-scale exit scams”.

These kinds of scams are nothing new in the cryptocurrency world of course, but given that the e-residence program is government backed it is extremely embarrassing for a nation trying to recover from the Danske Bank scandal that rocked the country in 2018.

Police Warn of “Considerable Connection”

Estonia has issued about 70,000 digital identities e-residents from 174 countries, with citizens of Finland, Russia and Ukraine being the heaviest adopters. The crypto license scheme has also been criticized for its openness, with Andre Nomm, a member of the Estonian Financial Supervision Authority’s management board, warning last year that Estonia was “giving out those permits too easily to God knows what companies” and that they were being used to “create credibility for some evil schemes.”

His comments seem to have been borne out, with the Financial Intelligence Unit warning that there is a “considerable connection” between the e-residence program and illegal crypto operations which could damage the country’s hopes of repairing its reputation in the financial world.