Italy Reviews Crypto Safeguards Amid Rising Retail Investor Risks and EU Fraud Bust

Italy’s Economy Ministry has initiated a comprehensive review of crypto safeguards to protect retail investors from rising risks, following a joint statement from key regulators. This move addresses vulnerabilities in direct and indirect crypto investments amid global uncertainties.

Italy launches in-depth review of crypto-asset protections for retail investors.
The Committee for Macroprudential Policies, involving Bank of Italy and Consob heads, drives the assessment.
Europol dismantled a €700 million crypto fraud network, seizing assets and arresting suspects across Europe.

Italy’s crypto safeguards review targets rising risks for investors. Learn about the Economy Ministry’s initiative and Europol’s major bust in this detailed analysis. Stay informed and protect your investments today.

What is Italy’s crypto safeguards review?

Italy’s crypto safeguards review is a thorough evaluation ordered by the Economy Ministry to determine the effectiveness of current protections for retail investors engaging in crypto-assets. Launched after a warning on escalating risks, the review involves top regulators like the Bank of Italy and Consob. It aims to strengthen defenses against potential threats in both direct and indirect crypto investments, ensuring a more secure environment amid favorable but uncertain economic conditions.

How did Europol dismantle the international crypto fraud network?

Europol coordinated a multi-phase operation targeting a sophisticated crypto laundering scheme that defrauded victims of over €700 million. The network operated through deceptive websites mimicking legitimate investment platforms, using aggressive ads to attract users with promises of substantial returns. Once engaged, victims saw fabricated profits on dashboards, encouraging further deposits that were then funneled through multiple blockchains and exchanges to obscure the trail.

The first phase on October 27 involved raids in Cyprus, Germany, and Spain, prompted by French and Belgian authorities, resulting in nine arrests. Seized assets included €800,000 in bank accounts, €415,000 in cryptocurrencies, €300,000 in cash, along with luxury items and incriminating documents. A subsequent operation on November 25 and 26 focused on marketing entities in Germany, Belgium, Bulgaria, and Israel, which employed deepfakes, forged media, and celebrity impersonations to draw in targets.

According to Europol’s statement, this operation stands as one of Europe’s largest crypto laundering cases, highlighting the advanced tactics of organized crime groups. The agency emphasized the role of digital anonymity in concealing funds, urging enhanced regulatory measures to combat such threats. Experts from the European Banking Authority have noted similar patterns in recent reports, stressing the need for better cross-border cooperation to safeguard investors.

Authorities busting crypto criminals. Credits: Europol

The Italian Economy Ministry’s decision to order this review stems from a meeting of the Committee for Macroprudential Policies, comprising leaders from the Bank of Italy, Consob, insurance and pension supervisors, and the Treasury’s director general. Their joint declaration underscores the launch of an assessment into the sufficiency of safeguards for retail participation in crypto markets. While Italy’s economic landscape remains generally positive, the committee highlighted persistent global instabilities that could amplify crypto-related vulnerabilities.

This initiative coincides with heightened scrutiny across the European Union, where regulators are grappling with the rapid evolution of digital assets. The review seeks to identify gaps in protections, potentially leading to updated guidelines or stricter oversight. Financial analysts, including those from the International Monetary Fund, have warned that without robust frameworks, retail investors face disproportionate exposure to volatility and fraud, as evidenced by recent high-profile scams.

EU leaders weigh new ESMA powers over crypto firms

The European Commission unveiled proposals on the same day to enhance the competitiveness of EU capital markets by streamlining cross-border operations and bolstering the authority of the European Securities and Markets Authority (ESMA). This effort positions the 27-member bloc to rival economic powerhouses like the United States and China, focusing on a unified services market to drive growth.

Enrico Letta, former Italian Prime Minister and author of a 2023 report on revitalizing the single market, advocated for redirecting €33 trillion in private savings toward productive investments. He observed that a significant portion lingers in low-yield accounts, while €300 billion annually migrates abroad, predominantly to the U.S., underscoring market fragmentation. In 2024, EU capital markets represented 73% of GDP, compared to 270% in the U.S., illustrating the disparity.

The reforms would transfer supervision of trading venues, central counterparties, central securities depositories, and crypto-asset service providers to ESMA, alongside expanded coordination in asset management. France, ESMA’s host nation, has championed this centralization. ESMA Chair Verena Ross expressed support, stating the package marks a pivotal advancement for integrated and efficient EU markets. This builds on the MiCA regulation implemented earlier in the year, which has sparked debates over consistent application.

Regulators from France, Italy, and Austria urged in September for ESMA to oversee prominent crypto entities, citing enforcement inconsistencies. France has signaled potential challenges to license passporting from jurisdictions with lax standards. Malta’s financial authority, under recent examination for its approval processes, resisted expanding ESMA’s crypto mandate, arguing for national autonomy in regulation.

These developments reflect a broader push for harmonized crypto oversight in Europe. The Bank for International Settlements has praised such initiatives for mitigating systemic risks, while industry experts like those from PwC emphasize the importance of balanced regulation to foster innovation without compromising investor safety. As the proposals advance, they could reshape the landscape for crypto firms operating across borders.

Frequently Asked Questions

What triggered Italy’s review of crypto safeguards for retail investors?

Italy’s Economy Ministry ordered the review following an official alert from the Committee for Macroprudential Policies on increasing risks to retail investors in crypto-assets. The assessment evaluates protections for direct and indirect investments, driven by global economic uncertainties and recent fraud cases, aiming to enhance security measures without disrupting market access.

What assets were seized in Europol’s crypto fraud operation?

In Europol’s takedown of the €700 million laundering network, authorities confiscated €800,000 from bank accounts, €415,000 in cryptocurrencies, €300,000 in physical cash, plus luxury watches, electronics, and scheme-related documents during raids in multiple countries, significantly disrupting the criminals’ operations.

Key Takeaways

Regulatory Scrutiny Intensifies: Italy’s review highlights proactive steps to shield retail investors from crypto risks, involving key institutions like the Bank of Italy.
Major Fraud Bust: Europol’s operation exposed a vast network laundering €700 million, using fake platforms and advanced laundering techniques across Europe.
EU Market Reforms: Proposals to empower ESMA could centralize crypto oversight, boosting competitiveness while addressing enforcement gaps.

Conclusion

Italy’s crypto safeguards review, alongside Europol’s decisive action against fraud networks and the EU’s push for stronger ESMA powers, signals a maturing regulatory framework for digital assets. These efforts prioritize investor protection amid evolving risks, potentially setting precedents for unified European standards. As markets advance, staying vigilant and informed will be essential for participants navigating this dynamic space.

Source: https://en.coinotag.com/italy-reviews-crypto-safeguards-amid-rising-retail-investor-risks-and-eu-fraud-bust

Highlights: US prosecutors requested a 12-year prison sentence for Do Kwon after the Terra collapse. Terraform’s $40 billion downfall caused huge losses and sparked a long downturn in crypto markets. Do Kwon will face sentencing on December 11 and must give up $19 million in earnings. US prosecutors have asked a judge to give Do Kwon, Terraform Labs co-founder, a 12-year prison sentence for his role in the remarkable $40 billion collapse of the Terra and Luna tokens. The request also seeks to finalize taking away Kwon’s criminal earnings. The court filing came in New York’s Southern District on Thursday. This is about four months after Kwon admitted guilt on two charges: wire fraud and conspiracy to defraud. Prosecutors said Kwon caused more losses than Samuel Bankman-Fried, Alexander Mashinsky, and Karl Sebastian Greenwood combined. U.S. prosecutors have asked a New York federal judge to sentence Terraform Labs co-founder Do Kwon to 12 years in prison, calling his role in the 2022 TerraUSD collapse a “colossal” fraud that triggered broader crypto-market failures, including the downfall of FTX. Sentencing is… — Wu Blockchain (@WuBlockchain) December 5, 2025 Terraform Collapse Shakes Crypto Market Authorities explained that Terraform’s collapse affected the entire crypto market. They said it helped trigger what is now called the ‘Crypto Winter.’ The filing stressed that Kwon’s conduct harmed many investors and the broader crypto world. On Thursday, prosecutors said Kwon must give up just over $19 million. They added that they will not ask for any additional restitution. They said: “The cost and time associated with calculating each investor-victim’s loss, determining whether the victim has already been compensated through the pending bankruptcy, and then paying out a percentage of the victim’s losses, will delay payment and diminish the amount of money ultimately paid to victims.” Authorities will sentence Do Kwon on December 11. They charged him in March 2023 with multiple crimes, including securities fraud, market manipulation, money laundering, and wire fraud. All connections are tied to his role at Terraform. After Terra fell in 2022, authorities lost track of Kwon until they arrested him in Montenegro on unrelated charges and sent him to the U.S. Do Kwon’s Legal Case and Sentencing In April last year, a jury ruled that both Terraform and Kwon committed civil fraud. They found the company and its co-founder misled investors about how the business operated and its finances. Jay Clayton, U.S. Attorney for the Southern District of New York, submitted the sentencing request in November. TERRA STATEMENT: “We are very disappointed with the verdict, which we do not believe is supported by the evidence. We continue to maintain that the SEC does not have the legal authority to bring this case at all, and we are carefully weighing our options and next steps.” — Zack Guzmán (@zGuz) April 5, 2024 The news of Kwon’s sentencing caused Terraform’s token, LUNA, to jump over 40% in one day, from $0.07 to $0.10. Still, this rise remains small compared to its all-time high of more than $19, which the ecosystem reached before collapsing in May 2022. In a November court filing, Do Kwon’s lawyers asked for a maximum five-year sentence. They argued for a shorter term partly because he could face up to 40 years in prison in South Korea, where prosecutors are also pursuing a case against him. The legal team added that even if Kwon serves time in the U.S., he would not be released freely. He would be moved from prison to an immigration detention center and then sent to Seoul to face pretrial detention for his South Korea charges. eToro Platform Best Crypto Exchange Over 90 top cryptos to trade Regulated by top-tier entities User-friendly trading app 30+ million users 9.9 Visit eToro eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong.