Cryptocurrency scams have been one of the largest problems that the digital currency space has had to deal with for several years now. According to the FCA (Financial Conduct Authority) report, issued earlier today, the UK currency and cryptocurrency scams in the last financial year totaled at around £27 million ($34.38 million) stolen.
Scams have tripled in the last financial year
The report points out that scammers often misuse social media in order to promote their get-rich-quick schemes, fake trading platforms, and alike. As a result, the number of reported scams has skyrocketed, and more than tripled in the last financial year, which ended in April 2020.
The FCA also notes that investors are often led to believe that they can earn a sizeable profit by simply investing early. Considering the fact that many in the crypto community aim to earn as much as possible, and as quickly as possible — particularly the newcomers who still do not have a firm grasp of how crypto investing works — these scams are often successful.
The scammers’ goal is to try and trick their victims into making as large an investment as possible, with the promises of returns constantly being offered, and constantly growing. Then, after the victim invests all the money they are willing to invest, the customer account would get closed, and the scammer would simply disappear. By the time the victim realizes that the entire ordeal was a scam, it is too late to do anything.
The FCA believes that one of the most important ways to interrupt the ever-growing number of scams is to increase awareness. To that extent, they plan to run ads which would serve as a warning for new investors. The FCA’s executive director of enforcement and market oversight, Mark Steward, said that it is important for the public to be suspicious of crypto ads that promise massive returns on investments.
Investors around the world are at risk
Of course, the current situation does not only include the UK, and the rise in the number of scams, as well as in the stolen amount, can be noticed elsewhere, such as in the US. The country has had countless incidents with crypto scams. One of the bigger ones was busted back in February 2020, known as My Big Coin Pay Inc.
The “company” was founded by Randall Crater, who tried to convince people that his virtual currency is backed by gold. However, Crater eventually got arrested in New York earlier this year, and the Massachusetts prosecutors charged him with money laundering and wire fraud. According to them, his tactics allowed him to cheat investors out of several millions of dollars, which was one of the bigger scams out there, although surely not the biggest one.
Scams continue to be a big problem for the crypto space, and this is unlikely to change in the near future. Whenever there is money to be made by scamming others, there will always be individuals trying to do so. Particularly now, when cryptocurrency prices are recovering, and when it is extremely difficult to detect a scam, it is more important than ever for the awareness of the dangers to be raised.