FCA voices concerns about crypto and FX scams, as losses surpass £27m

The UK Financial Conduct Authority (FCA) and Action Fraud today issued a warning to the public about investment scams carried out via illicit online trading platforms. 

This warning comes as cryptoassests and Forex investment scams reports more than tripled last year to over 1,800. This compares to 530 reports in FY 2017/18. The average loss due to such scams reached £14,600 in FY 2018/19, whereas the total loss amounted to £27,366,127.

Let’s recall that, in March 2019, the FCA published two pieces of research looking at UK consumer attitudes to cryptoassets. The research includes qualitative interviews with UK consumers and a national survey.

The qualitative research indicated some potential harm, including that many consumers may not fully understand what they are purchasing. Despite this lack of understanding, the cryptoasset owners interviewed were often looking for ways to ‘get rich quick’, citing friends, acquaintances and social media influencers as key motivations for buying cryptoassets.

Both the survey and qualitative research found that some cryptoasset owners made their purchases without completing any research beforehand.

Back then, the FCA estimated only 3% of consumers surveyed had ever bought cryptoassets. Of the small sub-sample of consumers who had bought cryptoassets, around half spent under £200 – a large majority of these said they had financed the purchases through their disposable income.

Christopher Woolard, the FCA’s Executive Director of Strategy and Competition commented:

“The results suggest that although cryptoassets may not be well understood by many consumers, the vast majority don’t buy or use them currently. Whilst the research suggests some harm to individual cryptoasset users, it does not suggest a large impact on wider society”.