Scammers take advantage of crypto-mania

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Such is the allure of cryptocurrencies that investors act in reckless haste, in the hope of making a quick buck. According to UK fraud reporting service Action Fraud, UK investors lost $ 113 million to crypto scammers last year, up from $ 77 million in 2019.

In the six months to May 2021, a particularly frenetic time in an already feverish global crypto market, fraudsters posing as Elon Musk are said to have pocketed more than $ 2 million. Other scams have used dating sites to lure reckless victims through false promises of romance. The new distant love mentions a good crypto investment opportunity and their brand of love sickness is parting with their money.

Scammers typically create credible-looking online ads and websites and send professional-sounding emails to advertise fictitious investment opportunities. False testimonials are often accompanied by a photo of a well-known and trustworthy public figure to provide legitimacy.

Cryptocurrency exchanges, many of which remain unregulated but provide an important platform for buying and trading digital assets, are particularly susceptible to scams. Criminals have manipulated trading volumes on seemingly reputable exchanges to tempt potential investors and strip them of their funds. Some have even set up fake crypto exchanges. These can harass users, refuse crypto withdrawals, charge exorbitant fees, or simply take the entire investment.

Many crypto scams flooding the market promise to double customer returns or give freebies in currency

Susannah Streeter, senior investment and markets analyst at financial services firm FTSE-100 Hargreaves Lansdown, notes the scale of crypto fraud in the UK has become clear thanks to the latest figures from the Advertising Standards Authority. These show that around 95% of all scam alerts currently received by the watchdog are for bitcoin.

Many crypto scams that flood the market promise to double customer returns or give freebies in currency, often featuring celebrity profiles on their ads, Streeter says. The only ones to get rich quickly thanks to these kinds of schemes are the crooks themselves.

The easiest way to avoid becoming a victim is to keep in mind that if anyone offers quick, risk-free returns, they are scammers. If it sounds too good to be true, it sure is.

Counter fraudsters

The Advertising Standards Authority is considering reforming its financial advertising mandate to include cryptocurrency among its priority areas, which may require new powers.

The Financial Conduct Authority (FCA) has pointed out that there is a limit to what it can do to crack down on online scams that are currently outside its regulatory scope. Since January, it has required all companies offering crypto-related services to register and demonstrate compliance with anti-money laundering rules and other safeguards. But he recently revealed that only five companies have registered so far, most of which are not yet in compliance.

Video-sharing social network TikTok has banned paid content for financial service promotions because it is clearly concerned about the number of users being tricked into investing money in bogus investing programs.

It was hoped that the government’s new online security bill would be broadened to cover internet scams, but at present it does not include fraudulent advertising, which means scammers will continue to sneak in. through the legal net.

One of the most notorious fake cryptocurrency exchanges was BitKRX, unmasked by South Korean authorities in 2017. It was named to emerge as the cryptocurrency arm of the world’s largest legitimate financial trading platform. country, Korea Exchange (KRX). When customers who thought they had bought bitcoin tried to access their funds, they found the money was missing.

In another crypto scam, revealed by a joint UK-Netherlands investigation, six people were arrested for setting up a bogus online cryptocurrency exchange that duped more than 4,000 victims in 12 countries on an estimated total of 19 million. The crooks were able to gain access to Bitcoin wallets using what is known as typosquatting. This technique relies on accidental misspellings made by people typing the web address of a genuine exchange into their browser. Victims arrive at a bogus website designed to look like the site they intended to visit. Its address may have a single letter different from that of the legitimate exchange, a small detail that is easy to ignore, but enough to allow criminals to do their jobs.

Banks take action

At the end of June, NatWest joined Barclays and Nationwide in limiting the use of cryptocurrencies by customers. He reports that a large number of scams have used social media to target both retail bank and corporate customers. The bank has temporarily capped the daily amount it can send to crypto exchanges, including one of the largest in the world, Binance. The maximum amount varies by platform, but is usually still a four-digit sum.

NatWest is also blocking payments to a small group of crypto asset companies where it has seen significant levels of fraud. Meanwhile, Santander has told its clients that it is stopping all their payments to Binance for their protection.

Binance insists it takes its responsibility to protect users from fraud attempts seriously, adding: When we are made aware of these types of complaints, we take immediate action and have a great record of collaboration. with law enforcement around the world to help them with their investigations. .

Katy Worobec is an expert in economic crime and Managing Director of UK Finance, the professional body for the financial services industry. She points out that each bank will have their own policies to protect account holders looking to buy and sell cryptocurrencies.

Most cryptocurrencies aren’t regulated by the FCA, Worobec says. For this reason, we always urge clients to proceed with extreme caution before making any crypto investment.

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