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Is this a Cryptocurrency scam
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Find out how cryptoasset investment scams work, how to avoid scams and what to do if you are scammed.
UK consumers are being increasingly targeted by cryptoasset-related investment scams.
Certain cryptoassets, like Bitcoin and Ether (also known as cryptocurrencies) are not regulated in the UK. This means that buying, selling or transferring these cryptoassets falls outside our remit. The same is true for the operation of a cryptocurrency exchange.
However, some types of cryptoasset products may be or may involve regulated investments depending on their nature and how they are structured. For example, firms that sell regulated investments with an underlying cryptoasset element may need to be authorised by the FCA to do so. The FCA has previously issued consumer warnings on the risks of investing in cryptocurrency Contracts For Difference (CFDs) and Initial Coin Offerings.
In recent months, the FCA has received an increasing number of reports about cryptoasset investment scams. Some of them may involve regulated activities, others don’t, but all use similar tactics.
We are aware that scammers are targeting consumers searching for investments online, in particular through search engines like Google and Bing. Although some scammers offer high returns to tempt you into investing, they may also offer realistic returns to make their offer appear more legitimate. Those offering or promoting products or investment opportunities found through search engines are not necessarily authorised or regulated by the FCA. You can check the FCA Warning List for firms to avoid.
How cryptoasset investment scams work
Cryptoasset fraudsters tend to advertise on social media – often using the images of celebrities or well-known individuals to promote cryptocurrency investments. The ads then link to professional-looking websites. Consumers are then persuaded to make investments with the firm using cryptocurrencies or traditional currencies.
The firms operating the scams are usually based outside the UK but will claim to have a UK presence, often a prestigious City of London address.
Scam firms can manipulate software to distort prices and investment returns. They may scam people into buying non-existent cryptoassets. They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred.
Action Fraud has also issued a warning on cryptocurrency scams.
How to protect yourself
Be wary of adverts online and on social media promising high returns on investments in cryptoasset or cryptoasset-related products.
Most firms advertising and selling investments in cryptoassets are not authorised by the FCA. This means that if you invest in certain cryptoassets you will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong.
While we don’t regulate cryptoassets like Bitcoin or Ether, we do regulate certain cryptoasset derivatives (such as futures contracts, contracts for difference and options), as well as those cryptoassets we would consider ‘securities’ – find out more information. A firm must be authorised by us to advertise or sell these products in the UK – check our Register to make sure the firm is authorised. You can also check our Warning List of firms to avoid.
You should do further research on the product you are considering and the firm you are considering investing with. Check with Companies House to see if the firm is registered as a UK company and for directors’ names. To see if others have posted any concerns, search online for the firm’s name, directors’ names and the product you are considering.
Always be wary if you are contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.
Find out more about investing in cryptoassets.
If you have been scammed
You can report the firm or scam to us by contacting our Consumer Helpline on 0800 111 6768 or by using our reporting form.
If you’ve invested in unregulated cryptoassets, you may not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme and you’re unlikely to get your money back.
If you have already invested in a scam, fraudsters are likely to target you again or sell your details to other criminals.
The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.
If you have any concerns at all about a potential scam, contact us immediately.
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