Crypto investment scams cost Australians $70 million amidst mainstream adoption

  • Crypto scam hit a new level with new data showing Australians lost $70 million in the first six months of the year.
  • Loses to investment scams involving Bitcoin was 17.8 million in the entire 2020, but the first half of 2021 alone has seen a 44 percent surge to record $25.7 million.

Crypto scam has long been associated with the significant surge of the total market value. This year has not been any different as a report by the Australian Consumer and Competition Commission (ACCC) reveals that crypto scams cost Australians about $70 million in the first half of the year. This is higher compared to the total loss reported in the same period last year. 

It is reported that crypto scams are projected to cost $140 million by the end of the year. Compared to the previous records, the Scamwatch division of the ACCC reported a 53.4 percent increase in scam tipoff as of the first half of the year with a total of 4763. According to deputy ACCC chair Delia Rickard, scammers were taking advantage of the rising interest in crypto, explaining why crypto scams are becoming more prevalent than ever, he added; 

More than half of the $70 million in losses were to cryptocurrency, especially through Bitcoin, and cryptocurrency scams were also the most commonly reported type of investment scam, with 2,240 reports.

Most crypto scams are difficult to detect

Loses to investment scams involving Bitcoin were 17.8 million in the entire 2020, but the first half of 2021 alone has seen a 44 percent surge with a loss of $25.7 million. Older Australians were most affected according to the report, making up 43 percent of the loss. Rickard explained that some of the scams are very difficult to detect as they use legitimate company information. 

These scams are particularly hard to detect because scammers use the companies’ legitimate prospectuses which are registered with ASIC, link to the actual websites, and have the correct ABN/ACN details. However, the scammers change key details such as contact information and bank details. That’s why it’s really important to contact the company using details you source yourself from doing a search online or visiting the company’s website directly and to seek independent advice no matter how confident you feel.

Most of the scams used fake celebrity endorsement as well as claims of highly trading systems based on individual expertise or through algorithms developed. With most of the schemes, payments were initially made with the money of other victims. Their model of operation was similar to the operation of any Ponzi scheme according to ACCC, and with time, pulled exit scams after using withdrawal problems as excuses. 

Ponzi schemes see a significant surge

According to Scamwatch, Ponzi schemes surged significantly with over 400 reports received in the first six months and $1 million losses in the Hope Business and Wonderful World scam. The scammers advertised their fraudulent schemes on social media and also provided accompanying applications on various app stores. Rickard further stated: 

These scams predominantly impact younger people, who might be seeing these ‘investment opportunities’ through social media, recommendations from friends, or by registering their interest in cryptocurrency on questionable websites.

Scammers also lured victims on various dating apps and sites by initially building relationships with victims, and convincing them to invest in crypto-related schemes. Rickard warned that any investment scheme that promises returns too good to be true should be suspected. 

About Author

John's a cryptocurrency and blockchain writer and researcher with years of experience. He has a lot of interest in emerging startups, tokens, and the invisible forces of demand and supply. He holds a Bachelor's degree in Geography and Economics. My Email: (kojokumijohn@gmail.com)

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