The amount of money victims have lost to cryptocurrency scams now stands at $200.7 million which is 30 percent higher than the figure recorded in the whole of 2020.
This is according to a report released by Action Fraud, the United Kingdom’s national reporting centre for fraud and cybercrime. The report is a study of 7,118 crypto fraud incidents since the beginning of 2021. The average loss per victim was just over $28,000.
Craig Mullish, the UK’s Detective Chief Inspector said the 2021 figure was a significant increase in crypto fraud especially compared to recent years but was not surprising given that people are spending more time online.
The majority of the victims were between the ages of 18 and 45. Victims between the ages of 18 years and 25 years accounted for 11 percent of reports.
Most victims often fall for the promise of high returns by criminals on social media. The criminals also use fake celebrity endorsements through which they advertise fake investment opportunities as a tactic.
Often, fake testimonials are accompanied with a picture of a well-known figure to help the investment seem legitimate.
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Between April 2020 and March 2021, Action Fraud received 558 investment fraud reports which made reference to a bogus celebrity endorsement with 79 per cent of reports mentioning cryptocurrency as the commodity they invested in.
Temporary Detective and Chief Inspector Craig Mullish from City of London Police said, `Reports of cryptocurrency fraud has increased significantly over the past few years, which is unsurprising given everyone is spending more time online.
“We would encourage anyone thinking about making an investment to do their research first and to stop and think before making an investment as it could protect you and your money.’’
Many firms advertising and selling investments in crypto assets were not authorised by the Financial Conduct Authority (FCA).
This means that if someone invests in certain crypto assets, they will not have access to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if something goes wrong.
Mullish, however, advised people to check the FCA register to make sure they were dealing with an authorised firm and check the FCA’s warning list of firms to avoid.