Beware Cryptocurrency Investment Scams

Chiltern Community Forum is not qualified or regulated to give investment advice.

However, as part of our role to help create a stronger, safer community, we WILL give advice to residents on keeping safe from potential fraud and criminal activity.

Recently, the writer of this article, a former investment professional, was approached by his 70-something neighbour, for an opinion on Bitcoin – should he invest in Bitcoin, as someone had been talking to his wife about it?

We don’t have an opinion on Bitcoin. More informed commentators may argue that Bitcoin has created significant wealth for some people. But it’s undeniable that, as the crypto market has boomed, so has fraud. The Financial Conduct Authority (FCA) reports that “UK consumers are being increasingly targeted by cryptoasset​​​​​-related investment scams.”

A recent tweet by the Cyber Protect Officer for Derbyshire Constabulary was startlingly explicit in its warning. In subsequent tweets it cited two specific websites, explaining “Once the victim has committed more funds the scammers pretend to personally manage the victims trading account. Shortly after the investment makes a loss and the victim is told they need to pay the shortfall. If the victim ever tries to withdraw funds they find no option to do so.”

We looked at a reviews page for one of these sites, and the difficulty to withdraw money was a frequent theme.

#Crypto investment #scams are becoming a real problem. Social media adverts are being used to lure people into depositing small amounts of investment money with malicious trading sites. Scammers then pretend the investment has made a profit & convince victims to deposit more… pic.twitter.com/WdMeN8PPPd

— Cyber Protect Officer (@DerbysCyberBiz) September 24, 2019

How potential Victims are lured in

We then turned to advice from ActionFraud and the FCA, and below is a selection of articles.

ActionFraud: Well-known names being used in cryptocurrency scams

Financial Conduct Authority: Cryptoasset investment scams

ActionFraud: Cryptocurrency Investment Fraud

These say little about the underlying viability of cryptocurrencies as investments, though the FCA warns whilst some cryptoassets may be regulated, others such as Bitcoin and Ether, and cryptocurrency exchanges, are not regulated in the UK. This means that investors may not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme.

Both sources deliver very strong messages about the means that criminals use to lure and defraud victims.

• Cold calling and social media are often the starting point. Frequently these lead to professional-looking websites, stressing the ease of making returns. Sometimes these feature false endorsements by prominent people – Deborah Meaden and Martin Lewis are two that have spoken out about the fraudulent use of their name.
• Victims will be encouraged to sign up for a cryptocurrency trading account, and to part with personal details such as credit card details and driving licences. The victim will then make an initial minimum deposit, after which the fraudster will call them to persuade them to invest again in order to achieve a greater profit.
• As reported above, the profits may prove to be illusory, sometimes manipulated, and often with no easy way to withdraw funds. In some instances the fraudulent website is deactivated and the operators can no longer be contacted.
• Be aware, too, that if you have already invested in a scam, fraudsters may target you again or sell your details to other criminals. The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.

How to protect yourself

• Stay in control – avoid unsolicited investment offers, and always be wary if you are contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.
• Don’t assume it’s authentic – professional-looking websites, adverts or social media posts don’t indicate that an investment opportunity is genuine.
• Repeating that Chiltern Community Forum is not regulated to give investment advice, we do offer the common-sense advice that one should understand investments, particularly high-risk ones. So if you are considering investment, research the product you are considering and the firm you are considering investing with. Check with Companies House to see if the firm is registered as a UK company and for directors’ names. Check whether a Securities Firm is registered via the FCA Financial Services Register. To see if others have posted any concerns, search online for the firm’s name, directors’ names and the product you are considering.

If you have been scammed

You can report the firm or scam to the FCA by contacting its Consumer Helpline on 0800 111 6768 or by using its online reporting form.

You can also report online to ActionFraud.