Cryptocurrencies fraud: $200m were lost in 2021 in the UK

By Raffaele Redi

The UK police said half of victims were aged 18 to 45 years old

Judge gavel, golden bitcoin and torn paper written with SCAM                                 
Action Fraud said celebrity endorsement is the most common tactic to defraud victims – Photo: Shutterstock
                                

A staggering £146m ($200m) has been lost to cryptocurrency fraud in the UK since the start of this year, amounting to almost a third of the funds lost throughout the whole of 2020, data from Action Fraud revealed.

Since the start of this year, the UK reporting centre for fraud and cybercrime has received 7,118 reports of cryptocurrency fraud, with an average loss per victim of just over £20,500.

The UK police said 18 to 25 year-olds accounted for the highest percentage of reports, 11%, while 52% of victims were aged 18 to 45 years old.

“Reports of cryptocurrency fraud have increased significantly over the past few years, which is unsurprising given everyone is spending more time online. Being online more means criminals have a greater opportunity to approach unsuspecting victims with fraudulent investment opportunities,” said temporary detective chief inspector Craig Mullish, from the City of London Police.

Celebrity endorsement to defraud victims

Between April 2020 and March 2021, Action Fraud received 558 investment fraud reports that referred to a bogus celebrity endorsement, with over three quarters, or 79%, of reports mentioning cryptocurrency as the commodity they invested in.

“Criminals will present professional and credible-looking online adverts, send emails and create websites to advertise fake investment opportunities, including cryptocurrency. Often, fake testimonials are accompanied with a picture of a well-known figure to help the investment seem legitimate,” said Action Fraud.

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

What is cryptocurrency fraud?

According to Action Fraud, as more people have invested their money in cryptocurrencies, criminals have capitalised on this as an opportunity to commit fraud.

“Criminals advertise schemes promising, in some cases, high returns through cryptocurrency investing or mining. Frequently advertised on social media, criminals try to lure you in with adverts offering easy money quickly to obtain your money or personal information.”

How to protect from cryptocurrency fraud

The organisation suggested investors be wary of online adverts and on social media promising high returns on investments in crypto assets or crypto asset-related products and be suspicious if contacted out the blue about an investment opportunity is the first step.

“Most firms advertising and selling investments in crypto-assets are not authorised by the Financial Conduct Authority (FCA). This means that investors in certain crypto assets will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong,” they warned.

“An FCA Register is available to make sure investors are dealing with an authorised firm and check the FCA Warning List of firms to avoid,” they added.

Further reading: Crypto crime: how it happens and how it's defeated

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