Crypto fraudsters skyrocket despite a huge crash in cryptocurrencies

• Money stolen from crypto frauds soars over 158% to £226m in the year to May.
• Feedzai urges customers to ignore any advert that creates a ‘too good to be true’ proposal like guaranteed huge returns on investments and free coins as a sign-up bonus.

The money stolen from crypto frauds has increased more than 158 per cent to more than £226 million in the year to May 2022 compared to over £142.9 million a year despite the huge crash in Bitcoin and other currencies.

According to a report by cyber security company NordVPN, cybercriminals have pounced on their victims despite a “crypto winter” gripping the market amid prices of major cryptocurrencies like Bitcoin and Ether are down over 55 per cent and almost 70 per cent this year. 

“With inflation skyrocketing and traditional savings rates failing to keep up, bogus crypto investment schemes offering the prospect for high returns are the perfect bait for scammers,” Marijus Briedis, CTO and digital privacy expert at NordVPN, said.

“These frauds are thriving, despite the huge crash in Bitcoin and other currencies, and worryingly the clear rise in the amounts stolen per fraud shows the scammers are getting better at fleecing their victims.”

Falling prey

Although the crypto industry is seeking change – in recent times, Daniel Holmes, Fraud Prevention SME at Feedzai, said that crypto popularity has been predominantly fuelled by the potential to make fast, sizeable gains from the volatility of markets. 

“It is this consumer desire to make money quickly, combined with the fear of missing out on growth opportunities that fraudsters are now savvily using to their advantage. The intricacies of crypto scams can vary wildly, but ultimately the macro-level convincer is always the same – the promise of something for free.” 

The Martin Lewis bill

However, Holmes said that consumers can follow some simple guidelines to avoid becoming victims of these scams, including ignoring any advert that creates a ‘too good to be true’ proposal like guaranteed huge returns on investments and free coins as a sign-up bonus.

In addition, he said that thoroughly checking out any crypto advert that uses a celebrity endorsement, as it is likely fake. There has been some progress on this front with ‘The Martin Lewis bill’ (driven by personal finance guru Martin Lewis to prevent tech giants from publishing celebrity-based ads without explicit consent) making its way into the Online Safety Bill. 

“It’s worth knowing that banks will do all they can to block transactions where they suspect a customer is being scammed – the technology that enables this is extremely sophisticated and passive to the consumer, so they don’t know it is happening,” he said.

No silver bullet

However, Holmes said that despite best efforts it will never be possible to stop them all, but do heed extra warnings from banks in the form of “in-the-moment” education and awareness and overt warnings. 

“If in any doubt whatsoever about a call you have received or a payment you are making, call your bank and seek immediate advice. Finally, the consumer also has a responsibility to keep their assets safe – this isn’t purely down to the bank. 

“On this basis, consumers should be encouraged to regularly educate themselves on the latest scam trends.”

Struggling consumers, during an economic downturn, he said tend to become more emotionally and financially vulnerable, and the lure of making high returns from investments like crypto creates a heightened susceptibility to scams which fraudsters prey on.

Briedis said that young people are the most likely targets, and added that such scams are often advertised on social media and use fake celebrity endorsements, with phishing emails and texts also used by crypto thieves.

“Aggressive malware is also spreading,” he said.

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