Investors lose millions to cryptocurrency fraud
13:12, 18 October 2021
An incredible £146,222,332 ($200,756,682) has been lost to cryptocurrency fraud in the UK since the start of the year, data from Action Fraud has revealed. This is almost a third more (30%) than was lost throughout the whole of 2020.
Since the beginning of 2021, Action Fraud has received 7,118 reports of cryptocurrency fraud. On average, victims lose over £20,500 to scammers.
Temporary detective chief inspector Craig Mullish, from the City of London Police, said: “Reports of cryptocurrency fraud have increased significantly over the past few years, which is unsurprising given everyone is spending more time online.
“Being online more means criminals have a greater opportunity to approach unsuspecting victims with fraudulent investment opportunities.”
Celebrity ‘endorsements’
According to Action Fraud’s figures, those under the age of 50 reported the most incidents. Those aged 18 to 25 accounted for the highest percentage of reports (11%), while over half (52%) of victims were aged between 18 and 45.
People are commonly sucked in by bogus online celebrity endorsements. Between April 2020 and March 2021, Action Fraud received 558 investment fraud reports that made refence to a fake celebrity endorsement on social media. Of those, over three quarters (79%) said they were convinced to invest in cryptocurrency.
What is cryptocurrency fraud?
Investing in cryptocurrency is not illegal, but as more people invest in digital currencies, criminals are trying to capitalise on gullible people who believe they can make a quick buck.
Action Fraud said that criminals often advertised schemes promising high returns through cryptocurrency investing or mining. Commonly, these are shared on social media platforms such as Facebook to lure investors.
But the returns often don’t materialise and fraudsters make off with any money sent to them.
Six ways to protect yourself from crypto fraud
Action Fraud listed several ways in which investors could protect themselves from cryptocurrency fraud, including:
- Be wary of adverts promising a high return by investing in crypto assets. It said: “Be suspicious if you are contacted out of the blue about an investment opportunity. This could be via a cold call, an email or an approach on social media.”
- Do not rush into an investment. Action Fraud said: “No legitimate person or firm will pressure you into making an investment or committing to something on the spot. Take time to do your research.”
- Check the Financial Conduct Authority (FCA) Register. Action Fraud pointed out that most firms advertising crypto investments aren’t regulated. This means that investors have no recourse through the Financial Ombudsman Service or the Financial Services Compensation Scheme.
- Seek advice before making an investment. This could be from trusted friends, family members or an independent professional financial advisor accredited by the FCA.
- Do not use any contact details that are not on the FCA Register. Action Fraud warned against using contact information provided by advertisements or cold callers, and advised investors to look out for subtle differences.
- Do not be sucked in by glossy looking websites. It explained that these would often make use of high-net-worth investor reviews, but said that these were not genuine and that fraudsters go to great lengths to convince investors they’re not promoting a scam.
Mullish added: “We would encourage anyone thinking about making an investment to do their research first and to stop and think before making an investment as it could protect you and your money.”
Victims of investment fraud should report the incident to Action Fraud online at http://actionfraud.police.uk or call 0300 123 2040.