KUWAIT CITY, Jan 29: With the allure of quick profits, the number of victims falling prey to electronic fraud is steadily increasing. A recent case in Kuwait underscores the growing threat, as traders in the country suffered collective losses amounting to approximately 40 million Kuwaiti dinars within just 24 hours. The financial setback came after they invested in a newly introduced cryptocurrency named “Bitcoin Kuwait,” which was created and promoted by an anonymous developer. Dr. Safaa Zaman, a Professor of Computer Science at Kuwait University and the President of the Kuwait Society for Information Security, first broke the alarming news on her account on the “X” platform. She revealed that “Bitcoin Kuwait” had collapsed almost immediately after its launch and that the developer, who meticulously orchestrated the fraud over three years, had disappeared after amassing $40 million from unsuspecting investors. Dr. Zaman raised critical questions: “Where is the oversight, where is the legislation and where is the fraudster?”

In a statement to Al-Seyassah, Dr. Zaman highlighted the lack of regulatory safeguards against cryptocurrency fraud in Kuwait. Despite the Ministry of Commerce and Industry’s refusal to grant licenses for Bitcoin trading and purchasing, there remains no effective oversight to shield the public from deception and fraudulent schemes. She noted with concern that the majority of those affected were teenagers and young adults who lacked sufficient awareness of the risks associated with such speculative investments. Dr. Zaman strongly advocated for the enactment of legislation criminalizing transactions involving encrypted digital currencies. She emphasized that the Central Bank of Kuwait already prohibits dealings with these virtual assets, which are typically controlled by anonymous individuals with dubious intentions.

Additionally, she called for accountability measures against intermediaries who played a direct or indirect role in facilitating the entry of “Bitcoin Kuwait” into the market. Those who contributed to the currency’s promotion over the past three years, whether through direct endorsement or indirect facilitation, should also be held responsible. She also criticized newspapers and electronic media platforms that had, over the years, published articles encouraging young Kuwaitis to invest in Bitcoin and other cryptocurrencies.

Expressing her disappointment, Dr. Zaman lamented the role of prominent media outlets that fueled public enthusiasm for what ultimately turned out to be a fraudulent scheme. She pointed out that the mastermind behind “Bitcoin Kuwait” managed to operate for three years before vanishing with millions, leaving behind a trail of financial devastation. Drawing comparisons to past incidents, Dr. Zaman stressed that people fail to learn from historical financial scams. She cited the example of a major Chinese bank that engaged in Bitcoin trading and subsequently suffered enormous losses, ultimately leading to its bankruptcy two years ago. Moreover, she questioned why authorities permitted the creation of “X” platform accounts for Kuwaiti groups promoting Bitcoin trading, despite widespread regulatory opposition.

Dr. Zaman noted that, despite existing religious fatwas prohibiting transactions in cryptocurrencies, many young Kuwaitis continue to be deceived. Alarmingly, even well-educated and cultured individuals in the country have fallen victim to such scams but choose to remain silent out of embarrassment. She pointed out that while there are over 1,000 different cryptocurrencies worldwide, Bitcoin remains the most well-known due to its initial promise of high returns, which ultimately entices investors into fraudulent schemes involving large sums. The professor attributed the rise in cryptocurrency fraud to a legislative vacuum that leaves Kuwaiti youth particularly vulnerable. She revealed findings from a recent study she conducted on Bitcoin, which indicated that approximately 60 percent of cryptocurrency traders in Kuwait were young people and gambling enthusiasts. This demographic, she warned, is especially susceptible to financial manipulation and deception. Dr. Zaman also shed light on the perils of digital stocks, sharing the story of a Kuwaiti engineer who lost 300,000 dinars to fraudulent digital trading schemes.

The financial disaster forced him to sell off most of his assets. She urged caution against even minimal experimentation with Bitcoin or digital stocks, warning that fraudsters employ sophisticated tactics to steal bank account information from unsuspecting investors. “The risks of Bitcoin investment should not be underestimated because the financial fallout could be even more severe than anticipated,” she cautioned. She also warned against the dangers of online gambling platforms proliferating through mobile applications. Emphasizing the role of authorities, Dr. Zaman called on Kuwait’s Communications and Information Technology Regulatory Authority to take action by blocking fraudulent websites. She explained that fraud methods are continuously evolving, incorporating new technologies to deceive victims.

Cybercriminals now use fake links, hacked social media accounts and even celebrity endorsements to make their scams appear legitimate. She further pointed out that the reluctance of many victims to report cases of electronic fraud emboldens fraudsters and perpetuates the cycle of cryptocurrency-related deception. To curb these growing threats, she advocated for revising and strengthening relevant laws, including the General Authority for Communications and Information Technology Law, the Electronic Media Law and the Anti-Information Technology Crimes Law. Such amendments, she argued, are essential to closing loopholes that allow malicious actors to exploit digital platforms for fraudulent activities, spread misinformation and incite hate speech without facing consequences.

By Najeh Bilal Al-Seyassah/Arab Times Staff