The U.K. financial watchdog earlier today released a report that indicates that cryptocurrency and forex scams have more than tripled over the past year. However, the total number of losses has reduced by around $4 million.
Losses From Cryptocurrency And Forex Scams Have Reduced
The report cites data from Action Fraud where the Financial Conduct Authority (FCA) indicates that cryptocurrency and forex scams spiked from 530 to 1,834 over the past year. In the same period, the losses fell from around £38 million ($48 million) to £27 million ($34 million). Also, the average loss per individual fell from £59,600 ($75,827) to £14,600 ($18,575).
Interestingly, the regulator noted that the majority of the losses (81%) were the product of crypto scams. Pauline Smith, Action Fraud director, noted:
“These figures are startling and provide a stark warning that people need to be wary of fake investments on online trading platforms. It’s vital that people carry out the necessary checks to ensure that an investment they’re considering is legitimate.”
The financial watchdog noted that the majority of the cryptocurrency and forex scams were promoted through social media platforms. The “get rich quick” scams often used fake celebrity endorsements and convinced naïve investors that they would make a profit from their first investment.
At the beginning of the year, the FCA published a survey that indicated around 73% of the consumers in the U.K. had no idea what a cryptocurrency was, yet they fell prey to schemes involving virtual coins due to the lure of quick profits.
Now the regulator plans to consult on a possible ban on the sale of certain crypto derivatives to retail investors by the end of 2019 – a ban the agency has been contemplating since November of last year.
In the past, the regulator has warned investors on the risks of getting involved with crypto derivatives products and unregistered brokerage firms. Currently, the agency is working with the Bank of England and the U.K. government to come up with some regulatory guidelines for the crypto industry.