Investing in crypto assets carries risk because they are unregulated types of investments. When you invest in traditional investments, you are mostly covered by regulation. If there is a failure you should receive compensation. Not so with crypto assets.
However, people are attracted to crypto assets by the possibility of extraordinary gains. Unfortunately, criminals also operate in the crypto field. They use sophisticated tactics to steal your money and any crypto assets you already hold.
Common types of crypto fraud
Perhaps one of the most common types of crypto fraud is where criminals set up a fake trading exchange. They promise high returns from crypto dealing through glossy websites with fake celebrity endorsements. Social media promotions aim to draw you into the scam and create an account on their fake platform. They then ask you to send money to your account. Usually it shows initial excellent returns, encouraging you to send more money. Eventually, however, you are locked out and they steal your money.
Another type of fraud is where the scammers approach holders of crypto currency with the aim of gaining access to their wallets. Once the fraudsters gain access to your wallet, they will change the password and lock you out.
Check that the crypto company is genuine
If you do wish to deal in crypto assets, you must check the company you are dealing with is properly registered with the Financial Conduct Authority (FCA). Crypto asset companies trading in the UK must register with the FCA. You should check the Financial Services Register to ensure the crypto company you are dealing with is registered.
Push Payment fraud
Most scammers encourage you to send money to your account on their online fake trading platform. You normally do this through digital banking where you instruct funds to be sent to the online account on the fake platform.
Banks in the UK are under an obligation to monitor customer accounts for irregular activities. If they think the activity in your account is unusual or not within your normal spending habits, it should be flagged to their fraud prevention department to check. If they think the activity is suspicious, they should contact you to discuss it. However, this does not always happen.
What are my options if I’ve been scammed?
If you have been scammed and have sent money to a fake trading platform, complain to your bank immediately. Explain that you have been scammed and ask them to investigate the payments you made. Then ask them to explain why they did not contact you about these.
The bank will likely reject your complaint. When they do that, you should contact the Financial Ombudsman Service (FOS). They will investigate the complaint and decide whether the bank has failed to protect you. If they decide that it has, they can order the bank to compensate you.
Do you need advice?
If you need assistance on any aspect of crypto assets, please take expert legal advice from Lewis Nedas Law’s crypto asset solicitors.
Blog post by expert crypto asset defence solicitor Siobhain Egan. For expert, trusted legal advice, please telephone us on 020 7387 2032 or complete our online enquiry form.