Lost Fortunes: Iraqi youth risk all in the world of Crypto and Forex
Despite government warnings, digital trading in both cryptocurrency and foreign exchange (forex) continues in Iraq, mostly among young people eager for a quick buck. Many, however, do not consider the consequences and risks associated with these transactions.
The rise in crypto and forex trading comes after Iraq’s recent economic crises, including the government’s limitations on US dollar trading to stabilize the exchange rate.
Although there have been no official statistics on the number of Iraqis scammed through digital trading, economic experts believe the figures are substantial. However, since Iraq bans both crypto and forex trading, victims have no way to legally reclaim their losses.
Since crypto and forex transactions occur outside the banking system, the traders are more susceptible to fraud. Last year alone, dozens of young Iraqis lost their life savings due to digital trading.
20-year-old Saja Al-Saadi is one such victim. She told Shafaq News that she had saved five million Iraqi dinars (around $3,800) from work but was lured by digital trading platforms promising high returns, who instead stole her money in the blink of an eye. “I was devastated,” she said. “Since these platforms are illegal in Iraq, I couldn’t even file a complaint with the police to recover my money.”
Another victim, 45-year-old trader Abdul Amir Khalil, faced a much larger loss of over $250,000. Khalil turned to digital trading platforms to avoid banking procedures and streamline transactions. “After transferring $250,000 to a digital trading company, the platform disappeared overnight, and I was unable to recover the money due to blockchain encryption despite enlisting the help of IT specialists.” He told Shafaq News.
Many of these scams are operated by individuals who use untraceable crypto transactions to steal funds. Some are run by local networks that pose as investment firms, promising “huge returns,” using fake social media profiles and instant messaging apps like Telegram and WhatsApp to reach potential victims.
while the list of victims continued to grow, the Central Bank of Iraq (CBI) declared in 2022 that it does not license forex, stock, or crypto trading platforms.
The bank warned that fraudulent online companies falsely claimed to be licensed, using misleading advertisements to promote investments in stocks, crypto, gold, and oil.
According to Iraq’s Anti-Money Laundering and Terrorism Financing Law No. 39 (2015), digital trading is prohibited due to risks associated with fraud, illicit transactions, and economic instability. The use of electronic wallets and cards for crypto trading is also prohibited, due to “concerns over money laundering and financial crimes.”
Despite this prohibition, many traders bypass restrictions anyway using VPNs and international bank accounts or rely on middlemen in neighboring countries like Turkiye, Jordan, and the UAE to deposit and withdraw funds.
Economic expert Ali Dadoosh explained to Shafaq News that forex companies targeting Iraqi investors operate without oversight from the CBI or any regulatory body.
“Iraq lacks a legal framework for forex trading; there is no official regulatory body overseeing digital currency transactions,” he noted.
Dadoosh emphasized that while digital currency trading can be profitable for experienced investors, it carries significant risks for untrained traders.
According to Dadoosh, while non-crypto digital currencies are traceable and regulated by banks (if fraud is suspected, banks can freeze transactions or reverse transfers), crypto is encrypted, unregulated, and often used for illegal activities, including money laundering and drug trafficking, and recovering stolen crypto funds is nearly impossible.
While digital currencies offer advantages, such as lower transaction costs and faster transfers, Dadoosh warned that most Iraqis lack the expertise needed to avoid falling victim to fraud.
He advised young Iraqis to learn trading before investing and to only use well-established, legal companies and wait for new government regulations.
There have been voices inside Iraq calling on the government to regulate crypto and forex trade instead of prohibiting it, countries such as Egypt and Turkiye have already begun talks on legalizing crypto and forex trade regulations. The UAE has permitted it under strict regulations that ensure investor protection. link
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