The number of frauds and scams involving cryptocurrencies in the UK has grown by one-third, the latest police data has revealed.
According to Action Fraud, the unit that tracks financial crimes, the amount stolen between October 2021 and September 2022 sat at £226m, equating to a 32% increase year-over-year.
A total of 10,030 incidents of crypto fraud took place in the UK during the surveyed period, the Financial Times reported.
Crypto fraud has been climbing steadily, with part of this being attributed to the fact that many consumers have shifted online during the pandemic, both for work and entertainment, making them more susceptible to complicated scams.
Many of the people who fall for cryptocurrency scams fall for the so-called “rug pulls” that get people to invest significant amounts before they disappear with the funds.
In November 2021, for example, a cryptocurrency token named after the Squid Game show managed to spirit away £2.5m of investor money, a small amount on the face of it, but a sore warning to people who are too keen to invest without doing their due diligence. The Squid Game crypto scam inspired others to try similar nefarious investment schemes.
According to Pinsent Masons forensic accountant Hinesh Shah, fraudsters are preying on people who have fallen on hard times or who have experienced financial distress.
Those investors were more likely to try their luck with an investment project that promised quick big returns. Many consumers still are influenced by the big money that some crypto investors made during the crypto boom, prompting them to try to engage in such operations themselves.
Apart from rug pulls, there are pump-and-dump projects which unfold over a longer period of time and create the illusion of a successful project. However, liquidity is usually not backed, and consumers sooner or later realize that their funds are probably gone forever.
Some have been inclined to call FTX’s most recent collapse a pump-and-dump scheme themselves.
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