German’s Fed BaFin, Warns Against Bulgarian ‘Crypto’ Financial Services Broker, 5 Capital


The Financial watchdog in Germany, BaFin, has issued a warning against a Bulgarian financial firm exposing its citizens to cryptocurrency-related portfolios. 5 Capital, the firm under fire, operates as a broker and therefore an access point to diversified portfolios. However, German’s Fed claims the firm is running an illegal business having not acquired proper authorization.

BaFin specifically highlighted that the Contract for Differences (CFD) offered by 5 capital are crypto affiliated. With the new AML law effective end of 2019, BaFin requires all blockchain or crypto firms to follow the license application procedure before commencing any operations. Crypto derivatives have however been spared by the law but will be overseen as per the current ESMA restriction.

According to BaFin’s intel, 5 Capital is located in Sofia, Bulgaria and operates under its parent company ‘21TEX’. The financial regulator further urged its citizens to be careful and follow due verification processes before investing any funds in digital currency affiliated projects.

BaFin’s Tough Stance on Digital Assets

The German regulator is among those looking to protect its monetary powers in the wake of cryptocurrencies. So far, they issued a warning against crypto-related activities with an emphasis on Initial Coin Offering by RISE. BaFin cautioned the Germans from investing in ICO’s given their fundamentals are mostly pegged on unimaginable tech claims or pure scams.

5 Capital’s case within the German FinTech space is pretty similar; BaFin advised interested traders to avoid the company’s platform if not exercising a high level of caution. Furthermore, those who choose to go down this road should not expect assistance from the financial watchdog in case they lose funds.

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