There have been record levels of crypto scams over the last year. This is how the UK’s financial watchdog is responding.
The UK’s financial watchdog opened more than 300 cases related to potentially unregulated crypto businesses over a six-month period last year.
A review released today showed a consistently high level of enquiries, with more than 16,000 across the six-month period, averaging almost 3000 a month.
This showed a roughly one third increase on enquiries from the same period the year before.
The review showed there to be four main types of scams: boiler rooms, cryptocurrency scams, FCA impersonation scams and recovery rooms.
The FCA noted an increase in reports about scams across multiple platforms, and in an attempt to ‘prevent, detect and tackle investment harms’ it published more than 700 consumer alerts in this time period.
This showed a continued upward trend in alerts from the past two 12-month reports.
The regulator also opened more than 300 cases relating to ‘potential unregistered cryptoasset businesses’ in the period, many of which are likely to be involved in scams, adding 172 firms to their Unregistered Cryptoasses Businesses list.
“Instead of just flashing the warning lights about the number of consumers being lured into risky crypto investments and scams, the financial watchdog is now getting a lot tougher on stopping suspect firms from entering the market,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“By showing it is increasingly on the prowl for scammers and fraudsters, the regulator is clearly hoping to deter more rogue actors from trying to entice vulnerable people into get rich quick schemes,” she added.
Streeter said the FCA were “swimming against an increasingly treacherous tide of scams and suspect investments” in terms of the the growth rate of the problem
“Given the volatile rise of coins and tokens over the pandemic, it seems many more fraudulent operations have been launched, to take advantage of consumers’ fear of missing out on the crypto rollercoaster,” she said.
“Now, with the cost of living squeeze intensifying, the focus should instead be on ensuring consumers have a resilient pile of savings and lower risk investments to fall back on.”