Safe or scam? Cryptocurrency Investment Scams
There has been a lot of media coverage in recent years promoting how investing in cryptocurrency can make a lot of money, and quickly. Cryptocurrency is not regulated in the way, for example, banking is. This means that any investment is extremely risky and should be considered and researched extensively beforehand. The Financial Conduct Authority has repeatedly warned that investors in cryptocurrency need to be prepared to lose all their money and is introducing new rules to require crypto asset providers to tell their customers just this.
Unfortunately, due to the allure and relatively unregulated nature of cryptocurrency, it has become the favoured method of payment for scammers. The vast majority of the general public do not have in-depth knowledge of how cryptocurrency works and the scammers can use this to their advantage. Usually they will use very technical language and images to explain how the investment works, to make it seem that they are trustworthy and knowledgeable and should take over for you.
Remote Access
Some scammers will ask you to download remote access applications onto your devices, such as AnyDesk or Screenleap. This is almost certainly a sign that it is not a genuine investment.
Fake Trading Platforms
These investments can look very convincing - they usually have professional looking websites you can log into to view the performance of your trades and they may even have an app to download to view your “account”. The websites will look professional and will mirror real-time fluctuations in the market, will have up-to-date stock tickers, show your deposits and will look just like what you would expect to see on a legitimate site. Unfortunately, the scammers can convincingly fake all of this and the activity is not real. Although it shows as deposited in your “portal”, your money hasn’t been truly deposited into this account, really it’s already disappeared. The scammers are trading with fake money.
Usually, the initial investment will be small to hook you in, typically around £250. They may offer ‘packages’ for you to purchase for high returns. After a few days, you are likely to see returns in your portal. Sometimes, if you do not have access to a portal they will send you pictures of the returns they have made for you. This is when they will convince you to invest more, either to increase your returns or to meet a threshold for the next trade. Sometimes they may explain that if you can make your investment up to X amount, you will receive a bonus and VIP access to a group who invests at that level.
The returns that you see on the portal are fictitious - they usually purposefully make it look like you are receiving significant returns.
Withdrawal Fees
Early on, or during the scam the fraudsters may let you withdraw a little money to gain your confidence. However, you will almost certainly run into an issue when you request to withdraw significant sums or all of your investment. This is when scammers tend to suggest that there are very expensive fees such as taxes, commission, withdrawal fees, a payment to prove ‘liquidity’ or even paying a percentage of your take home pay. They may suggest you take out loans or borrow money from friends and family to make this final payment.
You may seemingly successfully withdraw money only to be contacted by who you believe is a genuine company, such as Binance or Blockchain, suggesting that they are in receipt of your investment and there is a final payment to make to release your funds. This is also part of the scam and wouldn’t be something Binance or Blockchain would do. Unfortunately, regardless of how much you send, they will not return your money and you will most likely be blocked and removed from the portal once they believe you can no longer pay.
Account Balance Crashes
Sometimes, the scammers approach, after seeing fantastic gains, is to simulate a large downturn in your investment and the value may suddenly crash. The scammers will ask for more money at this point to ‘protect’ your investment or to bring the total over a certain threshold to re-open trades on your account. They would normally tell you at this stage that your entire account balance will be lost unless you invest more money, which is a trick to get you to lose more money to the scam.
Recovery Scams
If you have lost money to a cryptocurrency investment, it is incredibly important to stay vigilant and be aware of “Recovery Scams’. The fraudsters often pose as recovery companies or will sell your details to other scammers who pretend they can get your money back. Fraud victims are normally re-targeted by a new scam company who says they've located the funds, and promises to retrieve it for you for a fee. A common feature of these is that they have come to you out of the blue, you have never contacted them, and they are always a scam. Companies that can help you get your money back must be regulated by the Financial Conduct Authority or the Solicitors Regulation authority. Also be aware that scammers often pretend to be from legitimate companies and will clone their websites.
Investing in Cryptocurrency in 2023? How do I check if it is SAFE or a SCAM?
Here is a summary of some of the red flags to look out for:
🚩You have been approached through a text or a phone call, out of the blue
🚩You found the investment on social media
🚩You saw an advert online (sometimes these are falsely endorsed by celebrities)
🚩The returns too good to be true, or have been guaranteed
🚩You are requested to set up a new account with a neo bank or Electronic Money Institute (EMI)
🚩You are told to lie or mislead your bank about what you are doing
🚩They are asking you to download remote access onto your devices
🚩The scammers are in control of your investments
🚩They are persuading you to invest more
🚩They are asking you to make payments for fees and taxes
🚩The broker is unregulated
🚩The broker doesn’t let you withdraw all your money
Checks you can do if you are unsure if your cryptocurrency investment is genuine:
Check this list of unregulated crypto asset companies https://register.fca.org.uk/s/search?predefined=U
Check the FCA warning list for the investment company - https://www.fca.org.uk/consumers/warning-list-unauthorised-firms
Is the broker or financial professional regulated by the FCA https://register.fca.org.uk/s/ (sometimes they pose as real companies - call the number on the FCA register to check if it’s really them you are dealing with)
Do you have the ability to withdraw from the portal independently from the broker
If there is an ICO (initial coin offering) there should be a WhitePaper
Check google for the company name and scam
Read reviews on Trustpilot and other sites (be wary as sometimes these are fake - check the dates)
If you are ever unsure whether or not what you are investing in is genuine, call the number on the back of your bank card and speak to your bank’s fraud team.
I have lost money to a cryptocurrency scam, can I get my money back from my bank?
If you have lost money to this type of scam, Refundee can help you get your money back from your bank and you can fill in our fraud refund claim form for a free consultation. Our fee is 15% plus VAT on anything that we get back, and we don't charge anything if we are not successful. For larger cases, the fee is subject to a maximum of £10k plus VAT per case.
Remember, you don’t need to use a company like Refundee - you could work your case yourself for free! If you’d like to get a refund yourself. You can do this by following the ‘Claim Yourself’ guide here: https://www.refundee.com/claim-yourself.
