The Estonian regulator is investigating the operation of the e-Residency e-citizenship program, as foreigners registered as virtual residents are involved in cryptocurrency fraud.
According to Bloomberg, according to a report by the Financial Intelligence Agency of the Estonian Police, companies registered abroad and led by virtual residents of Estonia were involved in “several large-scale cryptocurrency scams.”
Estonian firms and e-Residency program participants have also been involved in organizing “suspicious IPOs and large-scale misappropriation.” According to the regulator, since the start of the e-citizenship program in 2014, about 70,000 digital identity cards have been issued to virtual residents from 174 countries. The program is most popular among citizens of Finland, Russia and Ukraine.
According to the head of the Financial Intelligence Department of the Estonian Police, Ott Vatter, the e-Residency team works “hand in hand” with the police.
“Not all of the scammers were virtual residents, but e-Residency members were among the scammers,” he said.
Earlier, regulators in Estonia warned that it is necessary to change the e-citizenship program, which allows non-residents to do business from abroad, in order to increase its security and avoid its use by fraudsters.
The police said a “significant connection” with e-Residency members increases the risk of reputational damage to the Estonian cryptocurrency industry. About a third of companies providing cryptocurrency services are associated with at least one virtual resident. A total of 554 former or current e-Residency members are associated with cryptocurrency service providers.
Recall that last year the Estonian government approved a bill initiated by the Ministry of Finance to tighten the requirements for issuing licenses to cryptocurrency companies.
