ASIC warns of rise in cryptocurrency scams

Maria Nikolova

Reports of misconduct received by the regulator from March to May 2020 are up 20% compared to the same period last year.

An increased number of Australians have reported crypto-asset scams to the Australian Securities & Investments Commission (ASIC), the regulator says. Most crypto ‘investment opportunities’ reported to ASIC appear to be outright scams.

Reports of misconduct received by ASIC from March to May 2020 are up 20% compared to the same period last year.

ASIC has also observed an increase in romance scams where people meet online and form a romantic connection. A scammer then directs someone to an investment opportunity in crypto-assets or forex trading.

Investors who have been scammed are typically called or emailed by scammers with an investment opportunity, or approached by their friend, family member, or online romantic partner who tell them how they have made money online and suggests that they try it too. Then investors typically sign up to ‘crypto-asset trading’ online and deposit funds into a trading account, either via a crypto wallet or bank account.

Scammers encourage consumers to deposit more funds into the account.

When an investor logs into their account, it may look as though they are making profits initially (due to fake data), but eventually shows ‘trading losses’ even though no actual trading is taking place. When the consumer asks to withdraw their funds, the scammers either cease all contact, or demand further payment before funds can be released.

Often scammers are also seeking to mine personal information from victims to engage in identity fraud.

According to the latest data provided by Scamwatch, Australian reported losses of $3.98 million due to investment scams in May 2020. Since the start of the year, the amount of such losses has reached $24.6 million. Those over 65 years of age reported the biggest losses, whereas the highest number of reports was submitted by those from 35 to 44 years of age.

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