In a shocking revelation, the Financial Conduct Authority, UK’s primary regulatory body, revealed significant losses incurred by the nation’s investors in the year 2018-19 in cryptocurrency trading and investing. As reported by the Financial Times on 20 May, cryptocurrency investors lost about £27 million roughly equivalent to about $34 million in crypto and forex related scams.
The data collected from Action Fraud, United Kingdom’s national fraud and cybercrime reporting center, also reported that average losses of individual investors reduced from its prior sum of $76000 to $18500 with a fall in the total amount of losses by $14 million. Meanwhile, cryptocurrency scams tripled in number with an increase of over 1800 cases.
Modus Operandi of Scammers
The report also stated that these scams often stem out of social media pages which the scammers use to their benefits. They lure the victims and attract potential investors with their low risk, high return promises. Often they would use a fake picture of a celebrity endorsing their website which would direct the user to professional looking sites persuading them to further their investments.
The Financial Conduct Authority is reportedly considering a total ban on derivative products with certain high risks to combat crypto scams. Earlier this year, fiat scams also reached a total high of £5 billion- £10 billion a year.
The Fraud Ridden Sector
News has also been going around of Goxtrade, a Bitcoin exchange platform, being a scam. Goxtrade made use of names and pictures of key blockchain personnel like Amber Baldet with no affiliation to the company. The exchange platform is also missing from the United Kingdom’s business and companies registry. The year 2018 also saw a study released by Statis Group that revealed that about 80 percent of initial coin offerings (ICOs) in the year 2017 were fraudulent. The total losses incurred during the year 2017 amounted to about $1.34 billion.