“If Something Sounds Too Good To Be True, It Probably Isn't”: Cyprus Market Chief Warns on Finfluencers and AI Frauds

The head of Cyprus's financial regulator, Dr. Giorgos Theocharidis, has flagged artificial intelligence (AI) and social media influencers promoting dubious investments as emerging risks that require closer scrutiny, while the island nation positions itself as a European hub for crypto and fintech companies.

CySEC Chief Warns AI and “Fin-Fluencers” Pose Growing Threat to Investors

Theocharidis who chairs the Cyprus Securities and Exchange Commission (CySEC) since 2021, told Forbes Cyprus in an interview published this month that his agency is wrestling with how to protect investors from unauthorized individuals on social media platforms who “display a luxurious lifestyle and promise quick and excessive profits” without proper licenses.

“We constantly remind investors that if something sounds too good to be true, then it probably isn't,” Theocharidis said during the interview, describing the phenomenon of so-called “fin-fluencers” targeting young investors as particularly concerning.

The comments come as CySEC navigates a major regulatory transition following the European Union's rollout of new crypto-asset rules and digital resilience requirements that took effect this year.

Theocharidis chairs the Risk Standing Committee at the European Securities and Markets Authority, putting him at the center of discussions about how supervisors across the continent should approach emerging technologies.

Related stories: CySEC Chair Says “AI Remains Uncharted” in Most of EU's Securities Markets

Crypto Licenses Stack Up Under New EU Rules

CySEC has received 16 applications from companies seeking licenses to operate crypto-asset services under the EU's Markets in Crypto-Assets regulation, which established uniform rules across the bloc. One firm that also holds an investment license has already secured approval, according to the interview.

Theocharidis described the transition as proceeding smoothly despite the demanding new requirements. “CySEC has taken a series of initiatives for the smooth transition to the new, demanding European regulatory framework, which beyond licensing and supervision, also focuses on investor protection,” he said.

The regulator stopped accepting new applications under Cyprus's previous national framework in October 2024, giving companies a window to prepare for the stricter EU requirements that became mandatory at the start of this year. Companies registered before the cutoff can continue operating until mid-2026 or until they receive a decision on their EU license application, whichever comes first.

Cyprus has attracted dozens of crypto businesses over the past several years, drawn by relatively light regulation and access to the European market. The shift to EU-wide rules represents a test of whether those firms can meet higher standards for capital, governance and consumer protection.

You may also like: CySEC Regulates 825 Firms, with 70 More Awaiting

Digital Resilience Rules Take Effect

Financial firms operating in Cyprus faced a January deadline to comply with the EU's Digital Operational Resilience Act (DORA), which requires companies to develop plans for managing cybersecurity risks and recovering from digital disruptions.

The rules cover everything from investment firms to crypto-asset providers, requiring them to report significant security incidents immediately and assess risks from third-party technology suppliers like cloud service providers.

CySEC issued guidance in September outlining fees ranging from €2,000 to €20,000 annually depending on company size, plus €20,000 for firms undergoing advanced penetration testing.

Theocharidis said the agency will conduct audits to verify compliance, describing the regulation as essential for “strengthening operational continuity and digital resilience in the financial sector.”

Balancing Growth and Enforcement

Theocharidis pushed back against suggestions that strict supervision might deter business. “Effective supervision is not an obstacle, but a basic prerequisite for the healthy and sustainable development of the market,” Theocharides said, arguing it strengthens credibility and attracts “healthy organizations.”

Looking ahead five years, the CySEC chairman said he envisions Cyprus as “a significant regional financial hub, especially in areas such as investment funds, financial technologies (FinTech), and green investments (Green Finance).”

The agency has set up systems to monitor how supervised entities market financial products, including materials promoted through social media influencers. It also maintains an online portal with guides and quizzes aimed at helping investors spot fraud.