The UK’s Financial Conduct Authority (FCA) recently issued a new warning regarding cryptocurrency scams. According to FCA figures, crypto scams are on the rise, and the number of reported incidents has escalated in recent months.
Consumers in the UK are increasingly being targeted by criminal gangs or individuals perpetrating cryptocurrency-related investment scams. According to FCA data, the most common cases relate to financial activities that require regulation by the authorities, as well as investment opportunities supported by cryptocurrency. Investment opportunities, and cheaper than listed crypto prices are also prevelant.
Social Media Celeb Scams
Scamsters often use of social media platforms to promote fraudulent investment offers, placing adverts that feature images of celebrities to grab attention and promote said “investments.” Recent examples have included entrepreneur Deborah Meaden of TV’s Dragons Den fame, and TV financial expert Martin Lewis (above), founder of MoneySavingExpert.com. These ads take the victim to a professional-looking website, where they are persuaded to make an investment using either cryptocurrency or traditional (fiat) currency.
The gangs operating these scams are usually based outside of the UK, although they will often claim to have a prestigious London address.
Other methods used to dupe potential investors include investment offers with high rates of return, and the purchase and investment into cryptocurrencies that don’t even exist, and never will. They may offer to sell an investor cryptocurrency at a far cheaper price than its current value. A fake exchange platform may simply close down a user’s account without explanation, then charge them extra before transferring their original funds.
The FCA recommends that individuals should carry out their own thorough investigations before undertaking any commercial agreements with companies they are not familiar with. The FCA does not regulate cryptocurrencies, which means that if one invests in cryptocurrencies in the UK, and then discover they have been defrauded, they will not have access to the Financial Ombudsman Service or Financial Services Compensation.
That is why it is essential that anyone looking at getting involved with a particularly enticing online crypto-related investment opportunity should do their homework, and investigate the company making the offer.
Always remember the old adage, if somethings seems too good to be true, that’s probably because it is (too good to be true), i.e., fake!