Cryptocurrency Fraud Warning

Over the past three months, the States of Jersey Police’s Joint Financial Crime Unit has recorded several complaints of online cryptocurrency investment frauds totalling over £600,000.

Scammers are spinning complex webs of deceit causing an increasing number of people to be lured in to these frauds with promises of high returns. Using adverts, sometimes using celebrity imposter accounts to endorse on social media platforms such as Facebook or Instagram to entice users to sign up. They’re then contacted by the scammers using high pressure tactics to convince the users to deposit funds into the fake schemes.

It starts off with friendly telephone calls, WhatsApp messages and emails, providing authentic documentation and promising high returns on investments with little to no risk.

One of the most recent cases the JFCU dealt with, involved a family who lost £200,000, their life savings to a scam cryptocurrency investment platform. After providing details online, the scammer contacted the victim impersonating a financial adviser and offered high returns if they invested in the cryptocurrency. The scammer then registered them on a legitimate crypto exchange platform and the victim was encouraged to place their funds into a crypto currency wallet as they were told that their money would double.

When it came to withdrawing their funds that had supposedly doubled, they were told they needed to pay fees and charges and were threatened with legal proceedings. The victims were continually pressured by the scammers to invest more money and encouraged them to borrow money from friends and family and to take out personal loans.

The funds were dispersed and are unlikely to ever be recovered.  The emotional impact for this family has been traumatic and distressing. They blame themselves and will probably struggle to overcome what has happened.

Investigating officer, Faith Shalamon said: “These scammers are heartless, they don’t care about their victims at all. They target all sectors of society and encourage people to invest life savings in high-risk products without understanding the risks involved.  They will often discourage their victims from seeking the advice of a third-party before investing. They ruin lives and we don’t want anyone else to get caught out by them.”

Victims of online frauds are often re-targeted by criminals who contact those who have lost money due to a scam, be it an investment, romance fraud or another form of scam, and claim they can recover the lost funds. The scammers ask that they pay an upfront fee – often a percentage of the funds originally lost – for the recovery 'service'.

Always be cautious of anyone cold calling, using high pressure sales tactics, offers of unrealistic returns or offers that are only available for a limited time. Also, always check and double check that websites that may look legitimate haven’t be cloned and that anyone claiming to be a financial professional is who they say they are.

How you can protect yourself

  1. Be wary of adverts online and on social media promising high returns on investments in crypto assets or crypto asset-related products and be suspicious if you are contacted out the blue about an investment opportunity. This could be via a cold call, an email or an approach on social media.

  2. Don’t be rushed into making an investment. No legitimate person or firm will pressure you into making an investment or committing to something on the spot. Take time to do your own research.

  3. Fraudsters often use complex new technologies to perpetrate investment schemes. Investors should always be suspicious of hard-to-understand pitches that accompany promises of outsized returns.  Sometimes the language will include typographical errors like spelling and grammar, usually a red flag that the person sending it is not a professional. 

  4. Always check the FCA Register online to make sure you’re dealing with an authorised firm and check the FCA Warning List of firms to avoid. Only use the telephone number and email address on the FCA Register, not the contact details the firm gives you and look out for subtle differences.

  5. Seek advice from trusted friends, family members or independent professional advice services before making a significant financial decision. Even genuine investment opportunities can be high risk.

  6. Use a financial advisor. Paying for professional advice may seem like an unnecessary expense, but it will help prevent you from being scammed.

  7. Just because a company has a glossy website and glowing reviews from ‘high net worth’ investors does not mean it is genuine – fraudsters will go to great lengths to convince you they are not a scam.

  8. Remember, if something sounds too good to be true, it probably is.

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