The rise in popularity of cryptocurrency has seen an explosion in crypto investment scams across the world.
According to the Australian Competition and Consumer Commission (ACCC), in 2021 cryptocurrencies were the most common payment method used in investment scams and caused the biggest losses.
Unfortunately, cryptocurrency has not just replaced traditional payment methods, it has enabled new scams which make it almost impossible to recover the lost funds.
According to the ACCC more than half of the $70 million in investment losses in the first half of 2021 were to cryptocurrency, especially through Bitcoin, and cryptocurrency scams were also the most commonly reported type of investment scam, with 2,240 reports.
Unlike bank transfers, once the cryptocurrency has been transferred to the scammer, it is generally irretrievable and often untraceable.
Why do scammers target cryptocurrency?
A combination of the attractiveness of cryptocurrency for the scammers and the fear of missing out on huge returns on the part of consumers has aided the explosion of cryptocurrency investment scams.
Media reports of instant crypto millionaires is an investment scammer’s dream. Reassured by the success of currencies such as Bitcoin and Ethereum and lured by the prospect of effortless riches, consumers who don’t really understand digital currency become easy targets.
How do the scammers target cryptocurrency?
Typically, a scammer will approach an intended target for a cryptocurrency investment scam via social media, a dating app or through unsolicited emails offering cryptocurrency investment opportunities.
What’s a typical scenario scammers might use?
The scammer, appearing wealthy and very successful from investment in cryptocurrency, will teach the intended target how to purchase cryptocurrency on a legitimate cryptocurrency exchange, and then once the scammer has gained the intended target’s confidence and trust, convinces the intended target (now the victim) to transfer their cryptocurrency investment to a fake website that looks like an authentic cryptocurrency trading platform. The scammer’s fake website typically has glowing testimonials and the ability for the victim to log in to the fake website to watch their investment grow, providing further credibility.
The fake, enormous returns shown in the victim’s account on the fake website encourage the victim to deposit even larger amounts and in some cases all their life savings. It is when the victim attempts to withdraw their apparent investment profits that things turn sour. Usually, at this time the scammer is urgently contacted by the victim The victim is pressured by the scammer into depositing even more savings to “unlock” their cryptocurrency account, and eventually the website disappears altogether and so too does the victim’s investment.
What can we do to protect ourselves?
The ACCC warns investment scams can be hard to spot, so advises that before investing, you always seek independent legal advice or financial advice from a financial advisor who is registered with ASIC.
The ACCC’s Scamwatch website has detailed information on investment scams, warning signs and other helpful advice on protecting yourself from scammers.
As always, our Member Service Team is here to help. If you think something is “not quite right” or believe you may have been scammed, please get in touch as soon as possible on 1300 688 825.
