Bitcoin scams on the rise as crypto fraudsters tempt victims with fake celebrity endorsements

Dragons' Den star Deborah Meaden previously spoke out about fraudulent investment websites claiming to be endorsed by her

Anthony Cuthbertson
Friday 17 August 2018 14:36
Comments
What is Bitcoin and why is its price so high?

Cryptocurrency scammers are using fake celebrity endorsements and social media to trick victims into investing in fraudulent bitcoin projects, the Financial Conduct Authority has warned.

Cryptocurrencies such as bitcoin and ether are not regulated in Britain, and the FCA said it has received a rising number of reports about investment scams that claim to offer high returns.

Some scams have falsely claimed to be endorsed by Deborah Meaden from Dragon's Den and Martin Lewis, the founder of MoneySavingExpert.com.

Given that cryptocurrencies are not regulated, consumers are unlikely to get their money back, and are not protected by the Financial Services Compensation Scheme.

The warning comes in the same week that reports emerged of a 22-year-old Finnish man losing $35 million worth of bitcoin in a major cryptocurrency scam.

"In recent months, the FCA has received an increasing number of reports about cryptocurrency investment scams, some of which may involve regulated activities, others which don’t, but all of which use similar tactics," the FCA said on Friday.

The FCA warned that UK consumers are being targeted by scammers with investment opportunities related to cryptocurrencies.

The fraudsters often use social media or images of well-known celebrities to promote their cryptocurrency investment scams, the watchdog said.

The online adverts link to professional-looking websites for investments either using cryptocurrencies or traditional cash.

The bitcoin scam involved a new cryptocurrency called Dragon Coin

"The firms operating the scams are usually based outside of the UK but will claim to have a UK presence, often a prestigious City of London address," the FCA said.

"Scam firms can manipulate software to distort prices and investment returns. They may scam people into buying non-existent cryptocurrencies. They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred."

A similar warning on cryptocurrency scams was issued by Action Fraud in April after it received 21 reports of fraudulent activity that had resulted in victims losing £34,000.

“With the growing sophistication of online fraud, it becomes increasingly important to carry out checks before parting with cash online," Dragons' Den investor Deborah Meaden said.

" A quick Google search will often reveal the truth and all online advertising should be read set against the premise of 'If it looks too good to be true then it probably is'."

Additional reporting from agencies.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in