WHAT IS IT?

Cryptocurrencies are digital currencies that use cryptography to generate ‘tokens’ and verify the transfer of these tokens between people. Cryptocurrencies are known for their market volatility so the value of investor’s assets go up and down quickly. Criminals have taken advantage of the unregulated nature of cryptocurrencies to scam consumers.

Criminals advertise schemes promising, in some cases, high returns through cryptocurrency investing or mining. These adverts may look official, include celebrity endorsements or personal testimonies. Often the celebrities may not even know their name or photograph has been used.

Frequently advertised on social media, criminals try to lure you in with adverts offering easy money quickly. They want to obtain your money or personal information.

Criminals benefit from the turbulence of the cryptocurrency markets, rushing people into parting with their money, pretending they are buying in at the right time.

Some people who have been scammed don’t realise for some time. They might make multiple or regular payments to the criminal and only realise when they try to withdraw their money from the ‘scheme’.

If something goes wrong with a cryptocurrency investment you are unlikely to get your money back, because they mostly aren’t covered by the UK’s Financial Services Compensation Scheme.

HOW TO SPOT A CRYPTOCURRENCY SCAM

  1. You see adverts on social media, sometimes celebrity endorsed, offering unrealistic returns on investments
  2. You’re contacted by phone, email or social media about an opportunity using aggressive techniques and incentives to buy before certain deadlines
  3. You’re told your buying in at the perfect time. You may be offered a high return on your investment with apparently little or no risk
  4. You’re pressurised into making a decision with no time for consideration

 

Examples of cryptocurrency scams

Celebrity endorsements

Arun saw a ‘celebrity endorsed’ social media post advertising the promise of big returns on Bitcoin. He contacted the company and following a phone call with a “trader’ was convinced to make a payment of £300. After logging into his trading account on the website, he saw his investment increase. Arun continued to invest more money following pressure from another “trader” from the company and was persuaded to take out a loan sourced by the criminal. Arun only realised it was a scam when he was unable to access his account to withdraw his money or contact the company.

Mining scheme scam

Emma had owned cryptocurrency for a few years and the value of her investment had gone up and down. Some of Emma’s friends got into crypto mining, and they said it was a great opportunity to make passive income on the side, without much effort or knowledge.

Having joined a mining group on social media to find out more, Emma was contacted by a ‘successful cryptocurrency trader’ who offered her fixed returns for an investment in a mining programme. Emma transferred some of her cryptocurrency to the trader, but she realised she had fallen for a scam when the trader became uncontactable.

New coin scam

Jadon had heard loads about cryptocurrency traders putting money into Bitcoin years ago and making a fortune. The influencers he followed on social media encouraged everyone to get involved. He went online to do some research and concluded he needed to invest in a new coin to make the most money.

Jadon saw an advert for a new coin and found it on a brokerage site. The advert said he could triple his money in months and that the makers of the coin had an office in London. Jadon put most of his savings into the coin as he wanted to maximise his returns, and he was told he wouldn’t loose anything as he was buying in at the start. It only dawned on Jadon that he had been a victim of a scam when his account stopped working and he was asked to make another payment to access his funds.

If you believe you’ve fallen for a scam, contact your bank immediately on a number you know to be correct, such as the one listed on your statement, their website or on the back of your debit or credit card.

Report it to Action Fraud on 0300 123 2040 or via actionfraud.police.uk. If you are in Scotland, please report to Police Scotland directly by calling 101 or Advice Dirhttp://actionfraud.police.ukect Scotland on 0808 164 6000.

ALWAYS REMEMBER

Crypto assets are nothing like money. Before you consider buying any, do plenty of research such as, checking if the company registration number is clearly stated so you can check them out on Companies House.  This is only valid for those companies registered in the UK.


Most cryptocurrencies aren’t regulated by the FCA which means they’re not protected by the UK’s Financial Services Compensation Scheme. If you are scammed it is unlikely you will recover any of your money.


Even if your friends or family are investing it doesn’t necessarily mean it’s safe.  You cannot call your provider to recall your transaction as you would if you were using a credit card.


Aggressive, opaque and/or unrealistic approaches, incentives to buy before a specific deadline and minimum order levels can be a sign of a scam.  Most reputable exchanges won’t adopt these tactics and allow for as little as £1 purchase of crypto.


Report scam adverts that appear in paid-for spaces online by visiting the Advertising Standard Authority’s website where you can complete their quick reporting form.