Philippines sounds the alarm on ‘enticing’ Bitcoin investment scheme

Regulators in the Philippines have warned against groups that have been soliciting Bitcoin investments from unsuspecting investors.

On Thursday, the Securities and Exchange Commission (SEC) of the Philippines issued an advisory urging investors in the country to “exercise caution” before investing in companies like Pluggle Inc., which it said has been “enticing the public to invest in the said entity” sans authority.

The advisory comes on the heels of reports that Pluggle has been requiring its members to sign up on its “advertising website” using a sponsored link as well as to purchase an activation code worth PHP1,000 (USD19) through their accounts “using Bitcoin or through other legitimate members or leaders.”

Pluggle said its members can earn PHP100 (USD1.94) upon registration, another PHP100 every time he or she logs in, plus an additional PHP60 (USD1.17) per log-in of other investors recruited. Members will also earn PHP100 for every person he or she “sponsored” into the system, as well as a “leveling bonus” of PHP400 (USD7.78) for one pair in each level down to the 10th level of the binary structure and a “pairing bonus of PHP100 for every pair in the binary structure.”

In its Facebook account, Pluggle said its members will have “a return of 30% – 100% in 12 days with the above-mentioned system.”
Pluggle is a registered with the SEC as a corporation, but the commission said the company does not have the necessary license required by the Securities Regulation Code to solicit investments from the public.

“Pluggle claims that it has an advertising website wherein its members can receive significant gains from the PHP1,000 initial investment by simply logging in everyday or by obtaining referrals,” the SEC advisory stated. “The public is hereby advised to exercise caution before investing in these kinds of activities and to take the necessary precaution in dealing with Pluggle Inc. or its representatives.”

People who will act as Pluggle salesmen, brokers, dealers or agents may face a maximum fine of PHP5 million or 21 years in prison under Section 28 of the Securities Regulation Code, according to the commission.

The Philippine government has yet to regulate the use of cryptocurrencies in the country, but the growing number of Bitcoin remittances has caused the Bangko Sentral ng Pilipinas—the sole authority that can issue money in the Philippines—to place virtual currency operators “under a more formal regulatory framework.”

In February, the Philippine central bank published a set of guidelines covering “any digital unit used as a medium of exchange or electronically stored value” that are outside the scope of e-money. Under the rules, digital currency exchanges are required to secure a certificate of registration from the central bank and will be required to adopt internal controls on risk management as well as cybersecurity measures that will reduce the risks of malware or hacking.

“The BSP aims to regulate VCs (virtual currency) when used for delivery of financial services, particularly, for payments and remittances, which have material impact on anti-money laundering (AML) and combating the financing of terrorism (CFT), consumer protection and financial stability,” according to the SEC, quoting a memorandum from the BSP.