Investment scams involving cryptocurrencies such as bitcoin and foreign currency trading have tripled in a year, with the average victim losing £14,600, according to the UK’s Financial Conduct Authority.
The regulator and the police-run body Action Fraud are warning the public to be wary of these scams, which typically promise high returns and are often carried out via bogus online trading platforms. More than £27m was lost to frauds involving so-called crypto-assets and forex investments in 2018-19, said the FCA.
Crypto-assets is a broad term covering many different types of products. The most popular include tokens such as bitcoin and litecoin. The FCA calls these “exchange tokens,” though they are often referred to as cryptocurrencies, cryptocoins or payment tokens.
The number of such scams reported more than tripled last year to 1,834 from 530 in 2017-18.
Fraudsters often used social media to promote their “get rich quick” online trading platforms, the FCA said. Posts often used fake celebrity endorsements and images of luxury items such as expensive watches and cars, that link to professional-looking websites where consumers are persuaded to invest.
Investors will often be led to believe that their first investment has successfully made a profit. The fraudster will then contact the victim to urge them to invest more money or introduce friends and family, but eventually the returns stop, the customer’s account is closed and the scammer disappears with no further contact.