Fresh wave of concern for crypto scams as bitcoin's value skyrockets

author-avatar By on August 24, 2021
Fresh wave of concern for crypto scams as bitcoin's value skyrockets

More than half of the $70 million lost to scams this year were to cryptocurrency scams as bitcoin's value surpassed US$50,000.

A new release from the Australian Competition & Consumer Commission (ACCC) revealed that Australians have lost more than $70 million to investment scams this year so far, with projected losses set to reach $140 million by the end of the year.

Investment scams are "more prevalent than ever", with many scammers capitalising on the popularity of crypto according to Delia Rickard, ACCC's Deputy Chair.

"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," Ms Rickard said.

Scammers are pretending to have highly profitable trading systems, allowing victims to initially access small returns before cutting off contact.

Losses to bitcoin scams have surpassed $25.7 million this year, which represents a 44% increase on the year prior. A total of $17.8 million was lost to bitcoin throughout 2020.

Ms Rickard advises people to "be wary" of low risk, high return investment opportunities.

"If something sounds too good to be true, it probably is," she said.

This news comes after the 'significant barrier' bitcoin (BTC) recently broke through the US $50,000 barrier for the first time since May.

Josh Gilbert, market analyst at investment platform eToro, said that the $50,000 threshold is a 'huge psychological barrier' for crypto investors as the market continues to recover. 

"When the USD$50K mark was first broken in February 2021, setting new all-time highs, we saw a huge breakout up to USD$58,000," Mr Gilbert said.

"If BTC can break above the next resistance level at $51,000 and hold, then I expect to see further upside as demand increases."

Imposter bond scams, Ponzi scams, and romance baiting scams also on the rise

The value of losses to other investment scams has increased, despite traditional investment scams still being 'very common'.

More than $6.8 million has been lost to imposter bond scams, where scammers are impersonating legitimate companies, luring in victims to purchase fake corporate bonds.

Almost half (43%) of imposter bond scams affected older Australians looking for well-known respected companies.

Ponzi schemes have also risen, with more than $1 million lost to Hope Business and Wonderful World scams in the first half of the year.

Scammers advertise on social media and via official app stores, where people invest money and make small withdrawals before scammers cut off contact.

Ponzi scams 'disproportionately affected' members of CALD - 'culturally and linguistically diverse - communities, including recent migrants from Burma and Sri Lanka.

More than 13% of losses to investment scams affected those who spoke English as a second language.

'Romance baiting', investment scams originating through dating apps and websites, have become 'increasingly common'.

Scammers are developing relationships with their victims and convince them to invest in scams.

Ms Rickard said that these scams "predominantly impact younger people" via social media.


Image by Aleksi Raisa on Unsplash

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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