UK’s Financial Ombudsman warns of a rise in crypto scams

FSO: Over half of the investment fraud received in Q1 involved cryptos

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Investment scams increase on the year before - Photo:Shutterstock
                                

The UK has seen a dramatic rise in cryptocurrency investment scams, according to the country’s Financial Ombudsman Service (FOS). 

The FOS, which helps to settle disputes between consumers and UK-based firms providing financial services, revealed that more than half of the investment fraud complaints analysed during the first quarter of the 2022 financial year involved cryptocurrencies.

It said that a typical scam involves consumers being persuaded to buy cryptos through a legitimate intermediary and sending money to what they believe to be a genuine investment platform. Instead, the platform is operated by fraudsters. 

Overall, the Ombudsman received 480 fewer complaints, including ‘impersonation” and romance scams, than the 2,380 complaints received in the first quarter of 2021/2022, a fall of 18%. 

However, investment scams, which made up 21% of scams in the first quarter of 2021, and 30% for the same period in 2022, were up 14%, to 570. By contrast, impersonation scams fell from 43% of the total to 33% during the same period, dropping 39% overall. 

Nausicaa Delfas, the FSO’s interim chief executive and chief ombudsman, said: “Complaints about investment scams are currently the fastest growing type of fraud complaint that the Financial Ombudsman Service receives.

“We are concerned that, in current economic circumstances, people could be tempted to invest in fake investments. Our advice to consumers is be wary, conduct their own research, check the FCA register and contact the firm directly on the number listed.”

FOS statment echoes recent FBI warning 

The UK is not alone in witnessing a rise in cryptocurrency-related fraud. 

Last week, the Federal Bureau of Investigation in the United States issued a public service announcement, warning that cybercriminals are increasingly targeting decentralised finance (DeFi) platforms to steal cryptocurrency. 

The FBI warned that fraudsters stole $1.3bn (£1.1bn) in cryptocurrency in the first three months of 2022. Citing the blockchain analysis firm Chainalysis, the bureau said that 97% of the crypto funds stolen during the period were stolen from DeFi platforms. 

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