What is Crypto Currency
Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralised system to record transactions and issue new units. It's grown in popularity in recent years and some investors see high returns.
While the returns may be high, in the last three weeks it has been reported that Bitcoin have hit an all-time high, investors should be aware that most crypto-related activities aren’t regulated in the UK. This means that if you invest in crypto, you generally won't have access to the Financial Ombudsman Service if you want to complain. You also won't be protected by the Financial Services Compensation Scheme (FSCS) if the firm goes out of business. This means it’s unlikely you’d get your money back.
What is Cryptocurrency Fraud?
Wherever there is money to be made the scammers are never far behind. It is being reported that two-thirds of investment scams are now estimated to start on social media. The organised criminal gangs behind scams are constantly evolving their tactics to exploit new trends and trick more victims into parting with their cash. Over recent years they’ve widened their net to target younger investors, who are often tempted by the supposed ‘get rich quick’ promise of cryptocurrency trading. The most common age range for crypto scam victims is 25 to 34 year olds, who make up a quarter of all cases.
The Financial Conduct Authority (FCA) has warned that “fraudsters tend to advertise on social media, often using images of celebrities to promote the fake investments. But they may also target people searching for investments online, through search engines like Google and Bing.
The scam adverts often link to professional-looking websites, where fraudsters may manipulate software to fake prices and investment returns. Once you’ve invested, the scammers may act quickly, closing your account and taking your money. Or they may continue the pretence, to encourage others to invest. You may not even realise you’ve invested in a scam until you try to sell your investment.”
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.
Between April 2020 and March 2021, Action Fraud received 558 investment fraud reports which made reference to a bogus celebrity endorsement – with over three quarters (79 per cent) of reports mentioning cryptocurrency as the commodity they invested in.
Checking the FCA’s Financial Services Register
Firms offering crypto products in the UK must be registered with the FCA or have permission to promote them. The Financial Services Register will show you which firms are registered, and which firms are operating without permission.
You can search the register for the firm by name, or by using its firm reference number (FRN). If the firm is registered, check what activities and services it has permission for. Check the firm's contact details and make sure they match the contact details you've been given. If you can’t find a firm on the FS Register, it’s unlikely the firm has permission to offer you crypto products and you should avoid using the firm.
But remember, just because a firm is registered, doesn’t mean you’ll have access to the FSCS or the Financial Ombudsman if something goes wrong.
How to Protect Yourself
- Be wary of adverts online and on social media promising high returns on investments in crypto assets or crypto asset-related products and be suspicious if you are contacted out the blue about an investment opportunity. This could be via a cold-call, an e-mail or an approach on social media.
- Don’t be rushed into making an investment. No legitimate person or firm will pressure you into making an investment or committing to something on the spot. Take time to do your research.
- Always check the FCA Register to make sure you’re dealing with an authorised firm.
- Seek advice from trusted friends, family members or independent professional advice services before making a significant financial decision. Even genuine investment opportunities can be high risk.
- Use a financial advisor accredited by the Financial Conduct Authority. Paying for professional advice may seem like an unnecessary expense, but it will help prevent you from being scammed.
- Only use the telephone number and email address on the FCA Register, not the contact details the firm gives you and look out for subtle differences.
- Just because a company has a glossy website and glowing reviews from ‘high net worth’ investors does not mean it is genuine – fraudsters will go to great lengths to convince you they are not a scam.
- Remember, if something sounds too good to be true, it probably is.
If You Have Been Scammed
If you’ve been scammed, defrauded or experienced cybercrime, report it to Action Fraud online or by calling 0300 123 2040.
If you’re worried about a potential scam, or you think you may have been contacted by a fraudster, you can report it to the Financial Conduct Authority on 0800 111 6768.
Please tell your bank or payment service provider as soon as possible, so they can protect your account and help you get your money back. Always contact them directly using a known email or phone number, such as the ones shown on their website or the back of your card, or call 159.
If you have received a scam email you could help stop criminal activity and prevent others becoming a victim of fraud by forwarding it to report@phishing.gov.uk before you delete the email.
If you’ve already invested in a scam, it’s important to remember that fraudsters may try to target you again, or sell your details to other criminals.
The follow-up scam may be completely different, or it may be related to the previous fraud. It may include an offer to get your money back or an offer to buy back the investment after you pay a fee.
For more information contact tsadvice@westberks.gov.uk , tel 01635 519930
