Cryptocurrency trading scams now second most common investment fraud type in Australia

Maria Nikolova

“The rise in popularity in cryptocurrency trading has not been missed by scammers who are latching onto this new trend to con people”, ACCC Deputy Chair Delia Rickard warns.

Digital tokens and coins, cryptocurrrencies and ICOs – all these concepts are at the heart of one of the most common fraud types in Australia. Scamwatch, the body operated by the Australian Competition and Consumer Commission (ACCC), has earlier today voiced its concerns about the continued expansion of certain investment scams, including binary options and cryptocurrencies.

Two types of investments where scams are prevalent are cryptocurrency trading and binary options, Scamwatch says. Cryptocurrency trading scams have grown significantly in the past 12 months and are now the second most common type of investment scam offer pushed on victims.

“The rise in popularity in cryptocurrency trading has not been missed by scammers who are latching onto this new trend to con people. These are similar to any other investment scam: the scammer will claim to have inside knowledge about price movements they will use to make you a fortune. If you invest, your money will quickly disappear,” ACCC Deputy Chair Delia Rickard said.

Binary options trading stays a popular scam activity area. It involves scammers pretending they can predict the movements of a commodity, asset or index prices over a short time. They direct investors to a website with a login, account details and a trading platform. They appear to put investors’ money into the account and demonstrate a number of successful trades to encourage the investors to invest greater sums. Then the investors’ money begins to disappear and so too does the scammer.

Scamwatch advises that the clearest warning sign that one may be dealing with an investment scammer is how they contact their potential victim and the promises they make. Any claims like ‘risk-free investment’, ‘low risk, high return’, ‘be a millionaire in three years’, or ‘get-rich quick’ are easy tells that one is dealing with a scammer.

Earlier in 2018, Consumer Affairs Victoria, a business unit of the Department of Justice & Regulation, within the Victorian government, warned about Bitcoin scams. Victoria’s consumer regulator said it had received reports of people being defrauded through fake Bitcoin websites. The average amount lost is approximately $300, but the body sees this type of fraud as worrisome.

Digital currency exchanges have been required to apply for registration with AUSTRAC since April 3, 2018.

AUSTRAC has informed digital currency exchanges that they must not use their registration status in any way that suggests AUSTRAC or the Commonwealth Government endorses them or any of their services or products. Words including ‘endorsed’, ‘approved’ or ‘licensed’ are examples of inappropriate wording. The new requirements stem from the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017, also known as the “Bitcoin bill”. In December last year, the legislative piece passed both Houses and got Royal Assent.

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