More than £27 million has been lost through scams involving cryptoasset (crypto) and forex investment fraud since 2018, a new report has revealed.
The finding is published as part of the Financial Conduct Authority (FCA) and Action Fraud’s new research into investment scams carried out by fraudulent online trading platforms.
In total, researchers found that reports relating to crypto and forex investment scams more than tripled in 2018/19, rising to over 1,800.
The research also reveals that victims lose, on average, £14,600 each to these types of scams, which often promise high returns with little risk.
According to the FCA, fraudsters use social media platforms to promote “get rich quick” online trading platforms. The majority of these posts use fake celebrity endorsements and images of “expensive watches and cars” to persuade victims.
After a victim has invested, the fraudster will typically lead them to believe that they have made a profit and will encourage them to invest even more money or suggest the service to friends and family. The fraudster will then close the account, taking the victim’s money with them.
Commenting on the report, Director of Action Fraud, Pauline Smith, said: “These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms. It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.
“Action Fraud is pleased to be partnering with the FCA to raise awareness of online trading scams, and we hope it will help prevent more people falling victim. Remember, if you think you have been a victim, contact Action Fraud.”
Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, added: “We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms.
“Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal. Before investing online find out how to protect yourself from scams by visiting the ScamSmart website, and if in any doubt – don’t invest.”
Kate Boguslawska, Partner in the Corporate and Commercial department at Carter Lemon Camerons, said: “Cryptocurrency is a relatively new sector, which brings with it new issues. The money lost through fraud is a significant problem, with many people losing vast sums of money to these scams.
“For advice on any related issues, contact one of our experts today.”