In recent years, the rise of cryptocurrencies has been accompanied by an alarming increase in crypto scams, leaving many innocent individuals financially devastated. The Australian Securities and Investments Commission (ASIC) outlines the top–10 signs of crypto scams and how to protect yourself from falling victim to these fraudulent schemes.
What types of crypto scams exist?
ASIC lists three broad categories of crypto scams:
- Scams where you think you’re investing in a genuine asset but it’s a fake crypto exchange, website or app.
- Fake crypto tokens (used to steal your crypto assets), and jobs trading crypto that look legitimate at first glance (but are really money laundering using crypto).
- Scams that use crypto-assets to make a payment.
Top-10 signs of a crypto scam
According to ASIC’s investigators, the top–10 signs of a likely crypto scam are:
- You receive an offer out of the blue.
- You see a celebrity advertisement that is actually a fake.
- A romantic partner you only know online asks for money in crypto.
- You get pressured into transferring crypto from your current exchange to another website.
- You’re asked to pay for a financial service with crypto.
- The app you’re using or directed to isn’t listed on the Google Play Store or Apple Store.
- You need to pay more to access your money.
- You are “guaranteed” returns, or free money.
- Strange tokens appear in your digital wallet.
- The provider withholds investment earnings “for tax purposes”.
Why do criminals choose crypto to commit scams?
Cryptocurrencies are typically not classified as financial products, resulting in them falling outside the scope of Australia’s standard consumer protection laws. Consequently, tracing transactions and recovering invested funds or crypto assets can be challenging, and this presents an opportunity for malicious actors to commit cybercrimes.
The impact of crypto scams in Australia
ASIC Deputy Chair Sarah Court said, “Australians lost more than $701 million to investment scams in 2021, up 135% from the previous year and these scams are continuing to increase. The main driver of the increase was cryptocurrency investment scams, where losses increased by 270%. The ACCC have advised that losses to crypto scams have increased further in 2022.”
“When Australians fall victim to scams the cost is often more than purely financial. Scams cause emotional stress and can impact relationships”, said Ms Court.
What to do if you have been targeted by a crypto scam
Ms Court said “If you think you’ve been the victim of a crypto scam, it’s important to act quickly. Draw a line under it. Don’t send any more money. Block all contact from the scammer.
“Do not delay. Contact your bank or financial institution immediately to report the scam. Ask them to stop any transactions. Also, warn your family and friends so they can watch out for potential follow-up scams.”
Key takeaways
Cryptocurrencies are commonly used by criminals to commit scams. It is important to know how to spot a crypto scam and how to act if you think you have been targeted, and following ASIC’s advice may help prevent you from falling victim to such scams.
