Australia’s ACCC Scam Watch Site Issues Crypto Investment Warning
With the rapid rise in cryptocurrency prices at the end of 2017 and the start of this year, the market faced a soar in amounts lost due to fraud and scams in the field. According to the Australian Competition and Consumer Commission (ACCC) investment instruments have seen an increase in scams generally during the year as compared to last year.
The overall 117% month on month increase in investment scams on investments such as real estate, stocks and commodities in Australia has been a problem the regulator has tried to slow before the year ends. However with new asset classes on the market, such as cryptocurrencies and binary options, the ACCC finds it more difficult to control the system.
The market scammers are known for the fairy tale promises they offer for you to join the scheme. The “get rich quick”, “make 50% profit a day”, “be a millionaire in 3 days” promises usually lead most investors to the scammers with a view to have massive gains. However, there lies a crucial solution to these scams. First, blockchains aim to be secure in transactions and investors should be careful to spot these scammers and report them.
As per ACCC reports, a total of 1796 reports of investment scammers have been made so far this year in Australia recording a combined loss of $26 million USD. Over half of the people most likely to getting scammed range from the age of 45-64. In the cryptocurrency field, the ACCC’s Scamwatch recorded a total of 1289 complaints in 2017 that made a combined loss of $1.2 million AUD.
In light of the above, statistics from the consumer watchdog in Australia have shown an increased level of crypto-related scams in the past year. Cryptocurrency fraud is now in second position in Australia’s investment field making it an issue of concern for financial market regulators.
The Australian Competition and Consumer Commission (ACCC) is the independent government institution tasked with the follow up of laws protecting consumers. The body identifies scams within the financial markets arena in Australia through oversight. Its functionality in identifying scams is completed by a domain known as ‘Scamwatch’.
Just a few days ago, the consumer watchdog issued caution to the public against investing blindly in crypto markets. This is connected to the second most committed financial fraud in Australia’s financial services sector whereby ignorant investors are promised unrealistic ROI’s. The past year has seen crypto and binary options trading gain immense popularity even in developing markets. Therefore, the industry has become more vulnerable due to malicious players whose aim is to defraud.
Delia Rickard, current deputy chair for the ACCC pointed out similar sentiments,
“The rise in popularity in cryptocurrency trading has not been missed by scammers who are latching onto this new trend to con people. These are similar to any other investment scam: the scammer will claim to have inside knowledge about price movements they will use to make you a fortune. If you invest, your money will quickly disappear.”
A report released by the ACCC show that scams related to Satoshi’s coin have increased by 126% where most were recorded when the market rallied up towards the end of 2017. It is for this reason that the watchdog urged Australian investors to beware of pump and dump projects hyped by the market. In addition to fake crypto investments, ACCC pointed out that traditional form of assets remain a potential area for scammers to date within Australia.
A recent annual report on scams released by the ACCC indicates that the arena has lost over $340 million AUD based on 200,000 scams. The fraud avenues used include launching fake ICO’s; an issue the SEC has been cracking down since the beginning of 2018.
Counterfeit ICO’s & Coin Exchanges
Creation of new crypto coins and coin exchange platforms is a trend on the rise. It is within this grey zone that a few rogue players have been able to build and hype projects with no prospects at all. Crypto investors may find themselves in a trap to buy bad investments to avoid FOMO, a behavioral finance aspect that often leads to a crowd mentality. Therefore, best research practices need to be carried out before investing in digital assets or trading via a specific crypto exchange.
Pump & Dump Schemes
One would think that old tricks in equity and bond markets do not apply in crypto. That appears not to be the case following a successful series of pump and dump coins since the market picked up. Big players within crypto markets have been using information advantage to pump inferior projects and exit before price correction. This has caught a couple investors’ off-guard making them lose fortunes in the process.
How To Avoid Crypto Scams
Hands-On Approach In Crypto Operations
People seem to be running away from blockchain and crypto due to the fear of handling technicalities. However, this is not necessarily the case since one can easily trade their altcoins in most platforms. The convenience of using digital coins like BTC cannot be underestimated especially with a couple of integrations in both debit and credit cards within tech savvy economies mostly in the east.
Users therefore need to be keen when choosing the platforms that they wish to store or transact their coins in. A regular follow up on the developments within services offered by blockchain and crypto-related platforms can easily change one’s perspective before investing. Also, a background check on reputation and costs charged would be a strong decision making factor for any investor.
Learn The Nitty Gritty Of Blockchain & Cryptocurrencies
It has always been vital for investors’ to understand the type of asset they invest in. Logic applies that crypto investors should take time to learn about technical and fundamental aspects that drive the market. This will help to prevent bubbles resulting from ignorant or uneducated investors as has been in past scenarios.
Crypto coins have sparked a lot of debate in the world right now. In fact societies like the Chartered Financial Analysts (CFA) are looking towards incorporation of the subject in its curriculum. A couple of the market players are still skeptical mostly due to regulation but have conquered the significance of blockchain in today’s world.
Therefore, it is not surprising that scammers have managed to penetrate the growing crypto markets. As seen from the statistics above, cryptocurrency scams are getting worse by the day. This calls for every investor dealing in the market to beware of these scammers and report them once identified.