Crypto and Forex Scams Account for $34 Million in Losses Last Year, Says UK Watchdog

Quick Facts:

  • Last year, the financial industry lost $34 million as a result of forex and crypto scams.
  • Of the 1,800+ claims, 80% were directly tied to cryptocurrency.

The Financial Conduct Authority (FCA) is the primary financial regulator of the United Kingdom, and they recently performed a report to learn about how the recent scams have impacted the market. According to the recent report, the region lost $34 million as a result of the scams that impacted cryptocurrency and the Forex industry from 2018 to 2019, according to the Financial Times.

The information gathered by the FCA was taken from Action Fraud, which is a cyber-crime reporting center. The individual losses sustained from scams went from $76,000 to $18,500, though the total losses went down by $14 million. Still, the number of reports has reached 1,834, and 81% of those claims have been associated directly with cryptocurrency.

According to the report, the FCA may end up banning the crypto asset derivatives products that are rather high risk. However, that type of ban has yet to be implemented. For the time being, executive director Mark Steward explained that scammers tend to be rather “convincing,” so it is important for consumers to have a certain level of awareness for their investments and the firms they use.

The FCA pointed out that a prime place that scammers end up finding a lot of their potential victims on social media. These scammers also will falsely list celebrities in their campaigns as a way to feign endorsements, pairing them with luxury goods to show the alleged potential for success.

Statis Group, an initial coin offering (ICO) advisory firm, released a study last year to show that the majority of 2017 ICOs were scams, adding up to $1.34 billion in losses. However, that has not limited the scams to 2017 at all. Some reports are suggesting that Goxtrade is a scam, due to their use of names and images to account for the members of their team. Thus far, these people have shown absolutely no connection with the company, with some of them speaking out to clarify the matter.

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