Scammers advertise on social media platforms, promise unrealistically high returns and sometimes use fake endorsements from famous people, the FCA cautions.
- Reclaws International (reclaws.com)
The UK Financial Conduct Authority (FCA) has updated and re-published its warning on cryptocurrency-related scams, noting that it has been getting a rising number of complaints in recent months.
According to the publication, instances of fraud sometimes involve FCA-regulated activities, for example, offering investment products with cryptocurrencies as an underlying asset. In most cases, however, the scammers use similar tactics and advertise mainly on social media. The ads lead to professional-looking websites that may appear legit to some investors, who are then convinced to invest either in fiat currencies or cryptocurrencies.
The FCA also notes that crypto fraudsters often use the images of celebrities or well-known individuals to advertise the products. A similar warning has been issued by Action Fraud, the UK cyber-crime and fraud center. Earlier this year, it raised the alarm on “the growing problem of criminals using the reputation of prominent people in cryptocurrency scams,” with examples including Deborah Meaden from the BBC’s Dragons' Den and Martin Lewis, the founder of MoneySavingExpert.com. Their names have been used in promoting crypto scams without their knowledge or consent.
The firms operating such scams are usually based outside the UK, but some claim to have an office with a City of London address. Much like the unregulated binary options brokers, who have scammed thousands of investors for millions, crypto fraudsters manipulate software to distort prices and investment returns. Sometimes they trick people into buying non-existent cryptocurrencies and are known to shut down bank accounts without reason or warning. The fraudsters typically refuse to transfer back clients’ funds or ask for more money with the promise of allowing withdrawals. Needless to say, no withdrawal is actually allowed.
As with all other types of investments, people should be wary of adverts promising unrealistically high returns and check whether the company is registered with the regulator, the FCA stresses.
Earlier this month, the watchdog issued a warning on cryptocurrency trading platform Fair Oaks Crypto.