A leading regulator in Australia has said that it has spotted a rise in the incidence of cryptocurrency scams in the country during the coronavirus outbreak.
The Australian Securities and Investments Commission (ASIC) said that it had received more reports than normal during the pandemic.
These reports, which come from consumers and pertain to the loss of money through crypto fraud, increased by 20% year on year when comparing March to May of this year with March to May 2019.
In a statement published on its website, the regulator outlines one of the ways that cryptocurrency scams can emerge and take hold.
“Investors who have been scammed are typically called or emailed by scammers with an investment opportunity, or approached by their friend, family member, or online romantic partner who tell them how they have made money online and suggests that they try it too,” the regulator said.
“Investors typically sign up to ‘crypto-asset trading’ online and deposit funds into a trading account, either via a crypto wallet or bank account.”
“Scammers encourage consumers to deposit more funds into the account,” it added.
ASIC then went on to outline what tends to happen once the scam had begun to bed in.
“When an investor logs into their account, it may look as though they are making profits initially (due to fake data), but eventually shows ‘trading losses’ even though no actual trading is taking place,” it said.
“When the consumer asks to withdraw their funds, the scammers either cease all contact, or demand further payment before funds can be released.”
There was also an identity fraud element to several of these scams.
“Often scammers are also seeking to mine personal information from victims to engage in identity fraud,” ASIC added.
In a related development, the regulator said that it had also spotted a rise in the use of so-called “romance scams”.
These see fraudsters developing what appears to be a romantic interest in the victim – only to then refer them on to a fraudulent trading opportunity.
ASIC said that it had seen a rise in versions of these scams, which led to foreign exchange and cryptocurrency scams in particular.
The regulator, which is responsible for oversight in the country’s financial services and markets sector, also provided information designed to help investors who are concerned that they have fallen victim to such a scam.
“Stop sending money, even if it’s to ‘withdraw funds’ – if the entity asks this it’s likely you’re being scammed,” it said.
“Report it to your bank or financial institution and lodge a report of misconduct with ASIC,” it added.
However, ASIC also struck a pessimistic note on the topic of apprehending those who perpetrate such scams.
It appeared to claim that individuals who work beyond Australian borders were particularly hard to find.
“Offenders are difficult to catch and lost money can be difficult to recover, especially when offenders operate outside of Australia and all contact has been online,” it said.
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