Warnings Issued After £346 Million Lost to Blockchain Scams Already in 2024

The SBG report revealed that almost £350 million has been lost to cryptocurrency and blockchain scams and hacks since the start of 2024. Platform Ethereum has been the worst hit, with over 30 incidents so far, followed by BNB, Arbitrum, Solana, and Bitcoin.

Ethereum is an open-source blockchain platform with its own cryptocurrency, Ether. Since its launch in 2015, it has emerged as one of the most popular crypto platforms.

The report also uncovered that, in the average year, the months of December to February have the highest likelihood of crypto scams taking place, with December being 39% higher than the monthly average.

While platforms like Bitcoin and Ethereum may claim to be more secure than traditional currencies, their convenience, supposed returns, and general popularity make them targets for scammers.

Cybercriminals use sophisticated tricks, such as impersonation, manipulation, and social engineering techniques, to con unsuspecting investors out of thousands of pounds. Some of their tactics include:

• Posing as a genuine crypto investment firm and convincing victims to transfer their money or crypto wallets.
• Using the lure of ‘free coins’ or credits to convince victims to put money into a crypto wallet – in the hands of the fraudster.

The UK’s City watchdog, the Financial Conduct Authority (FCA) publishes a warning list of unauthorised firms, so anyone thinking of investing in cryptocurrency should always check that list before parting with any money.

Smart Betting Guide commented on the data, saying that these types of cryptocurrency and blockchain scams:

“not only pose a threat to individual investors but cast a shadow on the broader narrative of cryptocurrency as a revolutionary force in finance.

“They erode trust, stifle innovation, and impede the progress towards a more inclusive and decentralised financial future. Therefore, the task at hand goes beyond personal security; it is a shared responsibility to fortify the foundations upon which the future of finance stands.”

Unfortunately, there is very little protection for cryptocurrency investors in the UK, and the investment platforms used may not always be FCA-regulated. Crypto and blockchain investments are considered very high-risk, speculative investments, and you should therefore be prepared to lose all your money if something goes wrong. If the platform is not FCA-regulated, then you may not be able to get help from the Financial Ombudsman Service (FOS) or the lifeboat Financial Services Compensation Scheme (FSCS) which can pay out compensation if a regulated firm fails.

If you think you have been the victim of a cryptocurrency scam, contact your bank immediately and report it to Action Fraud, the National Fraud and Cyber Crime Reporting Centre. If you have lost money through fraud, that may lead to a criminal investigation by the police.

Like many other financial scams, cryptocurrency scams can leave people feeling tricked and embarrassed. Banks have a duty to apply due diligence when handling your money and must have procedures in place to protect vulnerable customers, highlight unusual or high-value transactions, and block or delay them, where appropriate. In the first instance, your bank should be asked to investigate fraudulent transactions.

If the bank refuses to refund the lost money, a complaint can be made to the Financial Ombudsman Service (FOS). FOS is a government-backed body that resolves disputes between banks and their customers.

There have been several recent FOS decisions supporting customers who have been the victim of push payment scams, including cryptocurrency scams. As the claim is made against the bank, this can help circumvent the anonymity and complexity of the blockchain.

Sarah Spruce, Legal Director and Head of the Cryptocurrency fraud team at TLW Solicitors, commented:

“Cryptocurrency and blockchain investments are, understandably, extremely attractive to investors, but the same thing that attracts them also provides a breeding ground for scammers and fraudsters. It is key to stay vigilant and do your due diligence if you are considering any digital currency investment, as there is still very little protection should you be taken in by a scammer.”