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FCA: £27m Lost to Crypto Scams Last Year

The UK’s financial regulator has warned that £27m was lost in the last financial year to scams promising big returns on cryptocurrency and foreign exchange (forex) investments.

The Financial Conduct Authority (FCA) claimed that investors lost on average £14,600 to fraud during the 12-month period, with reports of scams more than tripling to 1800.

This kind of fraud typically starts on social media, where investors are lured by “get rich quick” promises, images of luxury items and celebrity endorsements. Clicking through takes them to legitimate-looking websites where they are tricked into handing over money.

“Investors will often be led to believe that their first investment has successfully made a profit,” warned the FCA.

“The fraudster will then contact the victim to invest more money or introduce friends and family with the false promise of greater profits. However, eventually the returns stop, the customer account is closed and the scammer disappears with no further contact.”

The findings are part of an awareness campaign being run by the FCA, supported by Action Fraud and the City of London police.

Its ScamSmart website is designed to make consumers more skeptical of get rich quick cryptocurrency and forex schemes.

“We’re warning the public to be suspicious of adverts which promise high returns from online trading platforms,” said Mark Steward, executive director of enforcement and market oversight at the FCA.

“Scammers can be very convincing so always do your own research into any firm you are considering investing with, to make sure that they are the real deal. Before investing online find out how to protect yourself from scams by visiting the ScamSmart website, and if in any doubt — don’t invest.”

Anyone that has fallen victim is urged to contact Action Fraud.

A report by Ernst & Young last year revealed that 10% of cryptocurrency ICOs lose their funds to hackers, with phishing a popular way to trick investors into handing over the private keys to their digital wallets.

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