Cryptocurrency crimes hit 8,000 a year as scammers flock to the market
More than 8,000 cases of cryptocurrency crimes were reported to Action Fraud in the UK last year, up from just 704 in 2016. In just four years, reports of such crimes have gone up by 1,150%.
This comes amid cryptocurrencies rise in popularity. Research published by the Financial Conduct Authority last week estimates that 2.3 million adults now hold cryptoassets in the UK, up from 1.9 million last year. However, the level of overall understanding of cryptocurrencies is declining, the regulator said.
Overall, there have been 24,847 reports of crypto crimes since 2016 in the country, growing on average 124% every year, said research company Crypto Head.
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Bitcoin (BTC-USD) has the most crime reports of any currency, totalling 23,492 reports since 2016, which the report said “can be expected” as it is the most dominant crypto in the market.
The most common types of fraud include crypto scam initial coin offerings (ICO): scammers lure investors with an ICO for a fabricated cryptocurrency, often taking information from legitimate coin sites to appear more convincing.
As new currencies enter the market often, this can seem like an attractive investment to ‘get in quick’, only to find it was all fake.
This was seen in cases such as bitconnect and pincoin where $2.6bn (£1.9bn) and $660m was stolen from investors.
Another type of fraud is called "crypto pump and dump schemes" where a small group of investors will pump money into a low value coin and convince private investors to follow suit so the group can sell their shares for a profit.
The price then drops back down to its true value and leaves other investors out of pocket.
In the case of "crypto theft", hackers can get in to crypto wallet and steal funds. The most secure wallet is an offline one with a unique password that you change regularly, the report said.
“People should always beware of platforms offering huge returns, if it sounds too good to be true it most likely is," said Adam Morris, co-founder of Crypto Head.
“Even if you see big names like Elon Musk supposedly endorsing the investment, do not take this at face value," he said, adding that consumers should always make sure they are using an exchange they trust and that doesn't have "insane fees".
Read more: Dogecoin plunges on China action, bitcoin slides
As crypto crimes go up, so has the popularity of monero, (XMR-USD), a privacy-focused cryptocurrency first released in 2014. Anyone can use it to send or request money but no outside observer can tell the source, amount, or destination.
The FT reported monero promises "to help make dirty money disappear without a trace" and it was linked to a suspected kidnapping case in which €9m (£7.8m, £11m) cryptocurrency ransom was being demanded.
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