Cryptocurrency Scams Swindled Australians out of AU$2.1 Million Last Year, Report States

Francisco Memoria
  • Australia's consumer watchdog has revealed the country's residents lost over AU$2.1 million to cryptocurrency-related scams last year.
  • Per the report, the amount of scams surged along with the price of most cryptocurrencies late last year.

Australia’s national consumer watchdog, the Australian Competition and Consumer Commission (ACCC), has recently published an annual report on scams that show the country’s residents lost over AU$2.1 million to cryptocurrency-related scams last year.

The report, titled “Targeting scams: Report of the ACCC on scams activity 2017,” shows that cryptocurrency-related scams grew in parallel with the cryptocurrency ecosystem’s value, which means they surged late last year.

Per the document, between January and September of 2017 about AU$100,000 were lost to crypto scams per month. The number surged in December 2017 – when bitcoin hit a new all-time high of nearly $20,000 – to over AU$700,000.

The regulator details that the average loss jumped from AU$1,885 in January to over AU$13,000 in December. The ACCC wrote:

"As the value of actual cryptocurrencies increased, so too did the scam losses in what people thought were real investments," the report continued. "By the end of the year, reports of losses related to cryptocurrencies exceeded AU$2.1 million but as with other scams, this is likely the very tip of the iceberg."

ACCC

Some of the cryptocurrency scams that swindled investors include fake initial coin offerings (ICOs), and pyramid schemes that survive off of new members. Authorities have been increasingly tackling cryptocurrency pyramid schemes. Recently, as covered, Chinese police arrested 119 in connection to a $2.3 billion pyramid scheme.

Fake ICOs have been addressed by the US Securities and Exchange Commission (SEC), which recently launched its own fake ICO to warn investors. The regulator’s move saw those who clicked to buy the fake tokens be redirected to a page teaching them about red flags in token sales.

The report claims that often victims enter these pyramid schemes after friends and family talk them into it, a “classic element of pyramid schemes.” The ACCC adds that some cryptocurrency-related scams it considered include ransomware, where victims are forced to pay hackers who encrypt their files. Phishing attacks have grown in popularity.

In total, Australians lost AU$340 million to scammers in 2017, with AU$100 million going to investment and dating and romance scams. Taking into account crypto scams cost Australians AU$2.1 million, they’re a relatively small part of the problem.

The ACCC’s report implies cryptocurrencies, despite their semi-anonymous nature, aren’t to blame for the scammer influx, as it notes scammers adapt to exploit popular trends. It reads:

"Scammers adapt each year and find ways to exploit popular trends, new platforms, new ways of communicating, fad products, changes to legislation, or new investment opportunities.”

ACCC