The Financial Conduct Authority, UK’s financial watchdog, is reminding consumers that cryptocurrency scams are rising in the country. Residents in the United Kingdom who decide to invest in Bitcoin or any other virtual currency are not protected by the regulatory framework given that cryptocurrencies are not regulated by the FCA.
£2 Million Lost In Cryptocurrency Scams In June And July Alone
A warning of cryptocurrency scams first made in June has been re-posted by the UK regulator to let consumers know that fraudulent schemes are on the rise.
“UK consumers are being increasingly targeted by cryptocurrency-related investment scams […] Cryptocurrency fraudsters tend to advertise on social media, often using the images of celebrities or well-known individuals to promote cryptocurrency investments. […] The firms operating the scams are usually based outside of the UK but will claim to have a UK presence, often a prestigious City of London address.”
Cryptocurrency swindles include posting images of celebrities supposedly endorsing said coins or tokens, according to the statement. The regulator has observed a rising number of reports about virtual currency scams, but its regulatory framework does not protect UK residents that choose to trade their fiat currency for any digital coin or token.
Britain’s financial watchdog has recently warned about two scams that involve companies impersonating respectable UK traders. Good Crypto and Fair Oaks Crypto have quoted the two legitimate firm’s addresses and Firm Reference Numbers as part of the swindle, the FCA said.
A report by the National Fraud and Cybercrime Reporting Centre said that approximately £2 million has been lost in cryptocurrency scams in June and July alone this year, an average of £10,095.59 per person. The statement noted that the most prevalent methods used by scammers are cold calls and social media-based campaigns.
Fraudsters are able to convince victims to sign up to their websites and provide sensitive information such as credit card details and driving licenses to open a trading account. Victims are then persuaded to make sizable first deposits before realizing it is a fraud, said Director of Action Fraud Pauline Smith.
“It’s vital for anyone who invests or is thinking of investing in cryptocurrencies to thoroughly research the company they are choosing to invest with. The statistics show that opportunistic fraudsters are taking advantage of this market, offering investments in cryptocurrencies and using every trick in the book to defraud unsuspecting victims.”
As the FCA handles a rising number of virtual currency scam cases, the regulator announced it has launched investigations into 24 different cryptocurrency companies. In March 2018, a task force was also established with the Bank of England and the Treasury to develop UK’s policy thinking on crypto assets.
Image from Shutterstock