Investors lose £27m to crypto, forex scams

Investors have lost about 27 million British Pounds sterling to crypto and foreign exchange frauds in the last one year.
The Financial Conduct Authority (FCA) and Action Fraud are warning the public to be wary of investment scams carried out via bogus online trading platforms.
This warning comes as cryptoassests (crypto) and forex investment scams reports more than tripled last year to over 1,800. Fraudsters promise high returns from investments in crypto and forex, with victims losing over 27 million pounds in total in 2018/19.
Fraudsters often use social media to promote their ‘get rich quick’ online trading platforms. Posts often use fake celebrity endorsements and images of luxury items like expensive watches and cars. These then link to professional-looking websites where consumers are persuaded to invest.
Investors will often be led to believe that their first investment has successfully made a profit. The fraudster will then contact the victim to invest more money or introduce friends and family with the false promise of greater profits. However, eventually the returns stop, the customer account is closed and the scammer disappears with no further contact.
Action Fraud reports show that on average, victims were each scammed out of £14,600 from forex and crypto scams in 2018/19.
Economic Confidential recalls that the global cryptocurrency market has already seen more than $706 billion of its total market capitalization evaporate since hitting a peak in early January, according to research site CoinMarketCap, and those losses appear to be triggering a shakeout in the wider blockchain community in China. Many startups there are finding it increasingly difficult to gain access to capital as investors grow skeptical of the fundamental claims around digital currencies and the blockchain technology that underpins them.

With visions of a decentralized new world order, many blockchain ventures had been touting themselves with the promise of new disruptive applications that would upend industries and revolutionize economies. But in hindsight, many of those startups were either exaggerating their potential benefits or the time that would be required to achieve them.

“It is a period of disillusionment. As much as I am a believer in the long term disruptive power of blockchain, it cannot solve all the problems in the world,” says Bonnie Cheung, a venture partner at 500 Startups. “You don’t know how many times we have read proposals that claimed to solve all pain points for almost every industry.”