£150k cryptocurrency fraud warning: key ways to protect your money from scams

Gloucestershire Police have issued a cryptocurrency scam warning after a victim was defrauded out of £150,000.

Staff at a bank in Cheltenham contacted police after a customer tried to transfer money to an account flagged as fraudulent. The customer, in their 60s, thought they were investing in a cryptocurrency scheme, but it was little more than a scam. The victim had been communicating with the scammers via WhatsApp.

Cryptocurrencies are generally unregulated financial assets that fall outside of the normal boundaries of financial markets. The best-known cryptocurrencies are infamous for their volatility and extraordinary price swings, while countless incidences of scams take place in so called “rug pulls” where someone touts the investment case of a particular token and encourages large numbers of investors to deposit money. Once the scammer has accrued enough money, they “pull the rug” and disappear with the funds, leaving investors with worthless digital tokens.


Spot the signs

Scammers are often highly sophisticated and use a web of digital tools to ensnare their victims. Fortunately, there are basic rules to have in your mind to protect yourself from fraud.

  1. Don’t give any heed to cold approaches. This could be via phone, email or any other communication platform such as social media. A random cold approach is a big red flag. Indeed, the Government is currently working to make all cold calling illegal.
  2. Beware too good to be true figures. A good signal that something could be a scam is a promise that is too good to be true. This includes guaranteeing a financial return on an investment, promising outlandishly high returns or any other hype around the future (and unknowable) performance of an asset. This is particularly common with cryptocurrencies.
  3. Verify their identities. If someone calls you claiming to be from a provider you use, such as your bank, pension provider or other firm, then thank them for contacting you but tell them you will get back in touch independently. Hang up the phone and find the contact number for the company and verify whether it really was them calling.
  4. Don’t get rushed. This is a classic tactic from scammers, they want to rush you into handing over information as quickly as possible because they don’t want you to stop and think whether this “product” they’re offering is actually real or if it is just a scam.
  5. Don’t trust websites you find on Google. Website cloning and URL spoofing is a rising problem. Although Google is the first port of call for finding a company’s website for many of us, scammers routinely buy advertising to appear at the top of results with cloned websites. Make sure the site you are clicking on doesn’t have odd spelling. Scammers will go as far as putting Cyrillic lettering in names to confuse search engines.
  6. Check the FCA register. As a rule, you should only ever engage with financial firms listed on the FCA register. This is perhaps the best way to ensure the legitimacy of a firm, and to find out contact information or website addresses. Although it’s not foolproof – firms get struck off the register for a variety of reasons – it is the best way to ensure the company you deal with is legitimate.
  7. Speak to an adviser. When making financial decisions around investing, it is really important to not just rely on your own gut feeling about an idea. Speaking to an adviser and getting the right help when making decisions can prevent disaster and will help you to make the best decisions possible in the circumstances.