On Friday, The UK Financial Conduct Authority (FCA) published an updated warning on its website about the danger of cryptocurrency investment scams, advising consumers to be skeptical of online ads that promise “high returns on investments in cryptocurrencies.” The warning also reminded consumers that the FCA has no regulatory authority over cryptocurrencies.
The FCA said that consumers in the UK are finding themselves “increasingly targeted by cryptocurrency-related scams” and noted that the agency has been seeing an increase in reports of such fraudulent schemes. According to the FCA, these scams typically rely on social media advertising and fraudulent endorsements:
Cryptocurrency fraudsters tend to advertise on social media – often using the images of celebrities or well-known individuals to promote cryptocurrency investments. The ads then link to professional-looking websites. Consumers are then persuaded to make investments with the firm using either cryptocurrencies or traditional currencies.
The firms operating the scams are usually based outside of the UK but will claim to have a UK presence, often a prestigious City of London address.
Scam firms can manipulate software to distort prices and investment returns. They may scam people into buying non-existent cryptocurrencies. They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred.
The FCA has warned consumers to be skeptical of any online crypto ads, and to thoroughly research crypto-related products prior to investing in them. UK residents are advised to contact the FCA to report any scam, even though the lack of FCA regulation makes it unlikely they’ll be able to recover their losses.