What can you do to try and help avoid a crypto fraud or scam?

Increased risk of crypto fraud and scams

On 5 March 2024, the price of the cryptocurrency bitcoin hit an all-time high.  Various other cryptocurrencies have also increased in price during a general rally in the crypto market.

However, this is against a backdrop of various scandals and times of rapid price increases, which are a boon to fraudsters.

Fraud involving cryptoassets is not new. On 16 April 2023, the Sunday Times ran a story entitled “I paid £2,000 for an NFT but scammers stole it”.

In times of large price increases, thefts of digital assets, including cryptocurrencies, are becoming more common.  What can you do to avoid being a victim of cryptocurrency theft?

So, what can individuals do to try and avoid potential frauds and scams?

Be careful online and specifically on social media

Indeed, the FCA recently stated an aim to target advice at individuals online and through social media.  This comes at a time when people are spending an increasing amount of time online (partly due to the recent pandemic). 

Do not be distracted by turbulent price increases

Crypto prices appear to be increasing again, which some will argue correlates to increased reporting of crypto fraud.  However, instead, focus on making sure to:

Heed the FCA’s and Action Fraud’s advice

In such times, and in order to identify and avoid such scams, individuals would be well advised to heed the FCA’s advice, including to ask yourself five important questions, specifically:

1. Am I comfortable with the level of risk?
2. Do I understand the investment being offered to me?
3. Are my investments regulated?
4. Am I protected if the investment provider or my advisor goes out of business?
5. Should I get financial advice?  

Further, follow Action Fraud’s advice, including to be wary of online and social media adverts promising high returns.  Finally, check any firm against the FCA Register and the FCA warning list.

And, finally, follow old wisdoms

Especially the old adage that if something sounds too good to be true, then it probably is!

If you have been the victim of a crypto fraud and/or scam then Gherson’s white-collar crime and regulatory team can offer advice on any attempted steps to obtain redress and also any associated crypto asset tracing.

Gherson’s white-collar crime and regulatory team has recently started a series on the regulation of crypto, with the aim of advising those who work in the compliance of this sector. In addition, for those who would like advice on relevant issues, including those who have had issues with the FCA registration process, our specialist regulatory and compliance team can guide individuals and companies through the process. 

Please do not hesitate to contact us for advice, send us an e-mail, or alternatively, follow us on Twitter, Facebook, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2024

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