Cryptocurrency scam losses are rising - fuelled by social media

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The amount of money reported lost to cryptocurrency fraud in 2021 so far is already nearly a third (30%) higher than for the whole of 2020, according to police figures.

Some £146,222,332 has been lost to cryptocurrency fraud since the start of this year, Action Fraud figures show.

The average loss per victim was just over £20,500, with 18 to 25-year-olds accounting for 11% of reports. More than half (52%) of victims were aged between 18 and 45.

People will often be promised high returns by criminals on social media.

Bogus celebrity endorsements are a tactic often used by criminals advertising fake investment opportunities, including in cryptocurrency.

Often, fake testimonials are accompanied with a picture of a well-known figure to help the investment seem legitimate.

Between April 2020 and March 2021, Action Fraud received 558 investment fraud reports which made reference to a bogus celebrity endorsement – with more than three-quarters (79%) of reports mentioning cryptocurrency as the commodity they invested in.

Temporary Detective Chief Inspector Craig Mullish, from City of London Police said: “Reports of cryptocurrency fraud have increased significantly over the past few years, which is unsurprising given everyone is spending more time online…

“We would encourage anyone thinking about making an investment to do their research first and to stop and think before making an investment as it could protect you and your money.”

Many firms advertising and selling investments in cryptoassets are not authorised by the Financial Conduct Authority (FCA).

This means that if someone invests in certain cryptoassets they will not have access to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if something goes wrong.

People can check the FCA register to make sure they are dealing with an authorised firm and check the FCA’s warning list of firms to avoid.

For more information about investment fraud, visit https://www.fca.org.uk/scamsmart