Brits Lost $34 Million To Cryptocurrency Scammers, FCA Warns

The Financial Conduct Authority (FCA) has raised concerns about the rise in fraudulent activity related to cryptocurrencies. In the 2018-2019 financial year, such scam cases cost British investors about £27 million (over $34 million), the UK regulator claimed in its recent report published on May 21.

Crypto Scammers Are Online

Between April 2018 and April 2019 the FCA reported that the number of cryptocurrency and forex-related complaints exceeded 1,800, citing data provided by the national fraud reporting service Action Fraud. Just one year prior, the number of similar claims was only 530. Notably, there had been an obvious switch in the scammers’ tactics, with the lion’s share of cases (81 percent) now related to cryptocurrency scams. There is a silver lining, however. Despite the rising number of scam reports, investors’ total losses decreased. The average individual loss per victim also fell considerably from £59,600 to £14,600. The FCA warns that scammers widely use social media to grab attention and promote their ‘get-rich-quick’ schemes. Fraudsters make promises of incredibly high returns and often use fake celebrity endorsements or images of luxury items. They trick potential victims into the first investment which always proves profitable. This encourages a victim to invest more or invite other investors. However, at this stage scammers disappear with all money.

Same Old Scam Story

Similar stories have been reported dozens of times before, and yet people don’t seem to learn by others’ bitter experiences. This again made the UK regulator to warn investors against repeating the same mistake. The authorities urge citizens to be suspicious of ads promising high returns and to carry out all necessary checks before making investments. FCA executive director Mark Steward recommends,

“Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal.”

The FCA and Action Fraud also announced the upcoming launch of a new campaign ScamSmart aimed to combat cryptocurrency fraud on social media. They hope to raise public awareness of online investment scams. Unfortunately, this is not a problem isolated to the UK. The Australia-based ACCC also reported a similar rise of cryptocurrency scams last year, with local investors’ losses amounting to $4.3 million. Scammers all over the world keep benefitting from the immense public interest in digital assets coupled with a lack of awareness and knowledge. Do you believe that educational campaigns for better public awareness are an efficient way to combat cryptocurrency fraud? Let us know your thoughts in the comments below!