A recent complaint regarding Bitcoin has highlighted the growth of investment scams involving cryptocurrency.
Wednesday, January 13th 2021, 6:00AM
by Daniel Smith
A recent complaint resolved by Financial Services Complaints Limited (FSCL), involving Bitcoin, has highlighted how easily consumers can fall prey to cryptocurrency scams.
FSCL found that a consumer used an exchange platform to purchase cryptocurrency to invest in an investment scheme and this resulted in a total loss of $15,000.
The key signs that the “investment” was a scam included the fact that it offered guaranteed returns, a photo on the company’s website purporting to be the CEO appeared to be someone else, and that the consumer had already received returns on his initial investment.
Although the exchange platform had set out their concerns at the time, it was only when the consumer had lost all of his investments and asked the exchange platform to refund him $15,000 for the Bitcoin he had invested, that he understood the exchange platform was not liable for the loss.
FSCL CEO Susan Taylor told Good Returns that while the number of cryptocurrency scams that the dispute resolution scheme is seeing is not huge, “With interest rates being so low people are looking for alternative means for investing their money. I think it is likely that this could lead to more people trying to invest their money in cryptocurrency.”
In the case of this specific cryptocurrency scam, the FSCL found that the investment platform was not at fault as it made several attempts to warn the investor of the dangers involved.
Taylor said that in order to serve investors in the modern market, platforms will need to “be careful that they are properly describing the risks to investors. I think that they are also going to need to work closely with banks and government departments such as the FMA to keep everyone informed.”
But advisers will also need to make sure that they are picking up the slack: “Advisers ought to be aware of the dangers surrounding cryptocurrency as it is fast growing in popularity.”
As the popularity of cryptocurrencies continues to grow, so too does the likelihood of crypto-scams. Taylor said, “The fraudster is always looking for new ways to get money out of people, I hope this is not the case, but I dare say we are expecting to see more of these kinds of complaints.”
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