Philippine police issue warning against crypto gaming scams

The game Axie Infinity was mentioned as an example of P2E model risks

The Philippine National Police Cybercrime Department has issued a cautionary advisory regarding potential cryptocurrency gaming scams, urging citizens to exercise vigilance when engaging in play-to-earn (P2E) games within the crypto gaming realm.

The advisory highlights the susceptibility of these gaming schemes to fraudulent practices due to the lack of regulatory standards, making users vulnerable to various scams.

The department emphasized the prevalence of scams within this niche, where operators often circumvent regulations against money laundering, leading to an elevated risk of fraud.

One commonly observed tactic involves luring victims with false rewards through counterfeit gaming apps. Scammers cultivate trust with victims before directing them to fraudulent games promising cryptocurrency rewards.

The “earnings” displayed within these games are often fabricated, and victims unknowingly fall prey to malware that activates when they join the game.

Axie Infinity, a popular metaverse game built on the Ethereum Blockchain, was cited as an example in the advisory. While the game itself was not labeled as a scam, the police warned about the risks associated with its P2E model.

Players are required to purchase at least three in-game characters to begin playing, necessitating an initial investment of $300. This investment requirement poses a higher financial risk compared to traditional gaming models.

The advisory also noted the broader vulnerabilities of the cryptocurrency market, including the volatility of native game tokens and significant economic barriers to entry for players. Notably, last year, many Filipino players of Axie Infinity experienced financial losses due to economic downturns and a major hack that resulted in stolen user funds.

To mitigate these risks, the advisory offered several recommendations. It suggested conducting thorough research on game ecosystems and creators before investing in cryptocurrencies. Furthermore, users were cautioned to be careful when interacting with anonymous individuals and to avoid falling victim to phishing attempts.

In the realm of wider crypto adoption, the Philippine Department of Information and Communications Technology (DICT) has partnered with the Philippines Blockchain Council (BCP) to promote the adoption of Web3 technology in the region.

DICT Director Emmy Lou Versoza-Delfin highlighted the growth of innovative blockchain startups and the successful deployment of blockchain-based solutions in various sectors.

At the same time, in January the Philippines Securities and Exchange Commission (SEC) sought to expand its regulatory control over the cryptocurrency industry through new draft rules.

The SEC aimed to enhance its oversight of digital financial products and cryptocurrencies, granting it powers over rule-making, surveillance, inspection, market monitoring, and enforcement. 

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Written by Silvia Pavlof

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