TThe number of reported crimes involving the crypto more than doubled while fraudsters turn to Bitcoin and other currencies to scam their victims over thousands of books.
In 2023, there were 10,308 reports on crime on crypto investments, according to the latest figures from the London City Police, which takes the lead on this type of crime for the whole country – against 5,106 in 2020. The victims lost 175.2 million pounds sterling in crypto -the scams linked in 2023 to an average of £ 17,000 each.
Cryptocurrency, a digital form of money that does not require banks involvement, has been used in 40% of investment scams reported to fraud action, the National Reporting Center for Fraud and Cybercrime, in 12 months until January 31 Last year. It is also used in romantic scams and employment fraud, because criminals benefit from the lack of regulations concerning digital currencies.
“The use of cryptocurrency in scams is widespread. It is too easy for fraudsters to disappear with the money of victims of scam without trace, “said Martin Richardson, owner of National Fraud Helpline, a law firm specializing in cases of fraud.
What’s going on?
The interest in Bitcoin and other cryptocurrencies has reached fever. Last month Bitcoin reached a record of $ 109,000 when Donald Trump said he would become the “president of cryptography” and described the plans to create a stock of national cryptography after winning the US elections.
About 12% of British adults have a crypto, according to a survey last November by the Financial Conduct Authority (FCA), the city’s regulator. In 2021, it was 4.4%.
Richard Mbombo, 59, from northern London, signed up for the Crypto Evincoinvest trading platform in July, after seeing a Facebook announcement promising important yields. “I do not play, I do not make the lottery, but when I saw the ad, I thought there is a chance, let me try,” said Mbombo, a cleaner who has four children.
After registering on the website, he was contacted by a manager who said that he could make great feedback on cryptographic investments. He initially invested £ 168 in a trading account and checked that he could withdraw funds to ensure that the site was legitimate. After that, he deposited £ 1,000 in the account of his savings.
Mbombo was contacted by an Evincoinvest employee who suggested that he contract a loan so that he could invest more. He was told that he would make his money an hour. “Everything seemed very authentic, I could not suspect anything wrong in what I was doing,” said Mbombo.
He contracted a loan of £ 10,000, but when he tried to transfer money from his bank account, the request was refused and his account was locked for 24 hours. Evincoinvest said that it should transfer amounts of less than £ 5,000 to avoid triggering safety checks. He transferred two lots of £ 4,250 to his Evincoinvest before his bank blocks a third payment.
After seeing negative criticisms and complaints concerning Evincoinvest online, Mbombo asked to withdraw his money but he was told that he could not. He visited the listed headquarters of the company in eastern London, but when he arrived, he found no sign of the company based there. The address given for the online company seems to be occupied by a McDonald’s.
When he sent a message to the company via WhatsApp to request a refund, he received abusive messages in response, said Mbombo. He has never recovered his money and always reimburses his loan. In October, Evincoinvest was placed on the FCA warning list of unauthorized companies.
When Mbombo realized that he was a victim of fraud, he felt sick. “I was very depressed and very disappointed. Even now, I’m talking about this, I dig the injury in me. I feel sick.
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What is crypto?
The first digital currency was Bitcoin, launched in 2009. This is virtual money, “exploited” by powerful computers resolving complex calculations. Parts and transactions are recorded on a large digital book known as Blockchain.
There are now hundreds of different cryptocurrencies and the market is estimated at around 3.2 billions of dollars. He had reached 3.6 billions of dollars in December.
But crypto is not regulated in the United Kingdom, which means that you are not protected if you lose money. This has made it a useful tool for fraudsters to take the payments of the victims because they are more difficult to trace.
“It is much easier to recover money for victims of fraud when the crypto is not involved, which is why fraudsters hung on it,” said Richardson. He said that 81 of the 200 most recent cases of National Fraud Helpline involved crooks sent money via cryptographic platforms or digital wallets.
Many of them have been authorized for payment frauds (application), the most common financial scam type, which implies that crooks encourage victims to transfer species under false pretexts. The money is then quickly moved to other accounts, which makes it difficult for banks to detect fraud and recover money.
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Losses on the application scams were nearly 460 million pounds made, as ignoring the bank’s direct warnings.
Fraudsters also pretend to be “blockchain recovery companies”, proposing to recover lost money against the victims for fees. “We had a client who lost more than £ 200,000 on a cryptographic investment scam. Then when he was dealing with us, he lost an additional £ 40,000 to one of these companies, “said Richardson.
Alan Jagolinzer, professor of financial accounting at the University of Cambridge, said: “Because the crypto is now common, the risk that people fall for a scam are higher because there is a perception that it is Less risky and people have the impression that they are missing outside. “Jagolinzer said that Crypto had created a” perfect setting for naive people to find themselves “.
The higher the price, the higher the number of frauds
On Wednesday, the Bitcoin price amounted to almost $ 99,000, up more than 30% since Trump was elected in November. “This certainly helps fraudsters when the cryptography market is optimistic (up), while when the market is more lower is more prudent,” said Daniel Holmes of the Fedzai Fraud Prevention Society.
Some banks have taken measures to try to slow down cryptographic fraud. HSBC, for example, limits its customers to £ 2,500 per day for cryptographic transactions, with a maximum of £ 10,000, while Nationwide has a daily limit of £ 5,000 for customers who buy a cryptocurrency .
The FCA warns you to be wary if you are contacted unexpectedly, forced to invest quickly or promised yields that seem too beautiful to be true. Although trading of cryptocurrencies is not mainly regulated, without consumer protection if you lose money because the company that keeps it away, companies wishing to market investments in cryptography or provide a Crypto trading platform must be recorded with the FCA.
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To make the FCA register, cryptographic companies must succeed in money laundering and conflict of interest tests, and have enough capital to support the company. You can find your register online, including correct contact details for approved companies.
Anyone who fears that they have been victims of fraud should contact their bank immediately to have payment blocks.
