One of the many ways that criminals are trying to steal your money is through cryptocurrency investment scams. They will try to convince you to invest in a scheme, share, or commodity, which either doesn’t exist, or isn’t worth the money that has been paid for them. These scams are becoming increasingly common and can take a variety of forms, so it’s really important you know how to spot them.
Cryptocurrencies are a digital means of exchange which use cryptography as a means of security. With a track record going back over a decade, cryptocurrencies are clearly more than just a fad.
But they remain widely misunderstood by many people, with doubts persisting about their genuine value and practical use. It is increasingly possible to use cryptocurrency to make purchases. Last year, for example, the payments giant PayPal announced a service allowing its UK customers to buy, hold and sell cryptocurrencies through their accounts. However, concern over the safety of cryptocurrencies as an investment class remains front and centre in the minds of financial regulators around the world.
Cryptocurrencies and their volatile behaviour has prompted the UK’s financial watchdog, the Financial Conduct Authority, to describe them as “very high risk, speculative investments and if you invest in cryptoassets,” it warns, “you should be prepared to lose all your money”.
Investment scams target investors by promising quick, guaranteed returns. Although “investment pitches” vary, using fraudulent cryptocurrency investment opportunities to entice targets is a common approach. Once targeted investors indicate interest, they are often instructed to wire funds abroad or to a third party’s personal account, or to transfer cryptocurrency.
Fake websites and/or applications often create the illusion of a legitimate trading or investment platform and gain trust. However, once funds have been transferred, they are difficult to trace and retrieve. Please see below the top 5 investment scams which should be considered as red flags.