Investment scams involving cryptocurrency


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.

What is cryptocurrency?

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”.

Cryptocurrency Investment Scams

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.

  1. “Guaranteed” high investment returns.
    Supposedly with little or no risk, and sounding too good to be true, because it is.
  2. Unlicensed or unregistered sellers.
    Use to check out the background of anyone offering you an investment in securities.
  3. Skyrocketing account values.
    Investments that appear to rapidly increase in value are often fake.
  4. Fake testimonials.
    Scammers often pay people to provide fake reviews, so never rely solely on testimonials in making an investment decision.
  5. Fake contacts.
    Take caution if someone approaches you through social media with an investment opportunity. This could be someone pretending to be a friend or to have a mutual acquaintance and this is a common tactic used to gain your trust.