Recent statistics from Action Fraud has revealed that over £146million has been lost to crypto scams in the past year. This represents almost a third (30 percent) of the money that was lost to scams in 2021. Overall, the scam watchdog has received 7,118 reports of cryptocurrency fraud, with an average loss per victim of just over £20,500.
Specifically, the watchdog is suggesting investors use advice from their ‘Take Five to Stop Fraud’ campaign which pushes people to ‘Stop’, ‘Challenge’ and ‘Protect’ themselves from making any drastic and dangerous decisions.
Craig Mullish, a Temporary Detective from the City of London Police, warned any buyers or investors in the crypto market to be cautious going forward as fraud continues to grow.
Mr Mullish said: “Reports of cryptocurrency fraud have increased significantly over the past few years, which is unsurprising given everyone is spending more time online.
“Being online more means criminals have a greater opportunity to approach unsuspecting victims with fraudulent investment opportunities.
“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.”
According to research carried out by Pinsent Masons, the UK has witnessed a 116 percent increase in cryptocurrency fraud reports.
This is up from 3,983 to 8,614 in the 12 months which suggest fraudsters are recognising this method as a useful money-making venture.
Hinesh Shah, a Senior Associate Forensic Accountant and Financial Crime Investigator at Pinsent Masons, addressed how grave the wave of crypto scams are for the police and the courts.
Mr Shah explained: “This rising tide of cryptocurrency fraud shows no sign of peaking. The police are now swamped with reports and cannot place adequate resources on these investigations.
“However, the UK civil courts can be used to track down crypto fraudsters and get stolen funds reclaimed.
“There is a misconception that cryptocurrencies cannot be traced but the point of blockchain technology is transparency: transactions on the blockchain are traceable.
“Fraudsters can try and make the job more difficult by transferring small amounts of cryptocurrencies to many different wallets, or utilising mixers to try and disguise their ill-gotten gains.
“However, legitimate crypto institutions that want to stay on the right side of regulators and enforcement agencies will cooperate with a UK court order and freeze the stolen assets.”
Anyone who is concerned that they have been targeted by a cryptocurrency scam is encouraged to contact Action Fraud as soon as possible.
Further research on the evolution and prominence of scams involving cryptocurrency can be found on the Action Fraud website.