Cases of crypto fraud on the rise as scammers rake in hundreds of millions.
Almost half a billion pounds has been lost to cryptocurrency scams over the past three years, according to data from Action Fraud.
Scammers raked in £226m in 2021-22, up from £171m in 2020-21 and £71m the year before, a freedom of information request to the national crime reporting service has revealed.
The number of reports it received about crypto fraud increased to 10,030 in 2021-22, up 16pc on the previous year.
Law firm Pinsent Masons, which obtained the information, said despite the decline of many cryptocurrencies, small investors were still being lured in by “get rich quick” schemes.
The price of Bitcoin has fallen more than 70pc since hitting record highs last year, while the collapse of the world’s second-largest cryptocurrency exchange FTX has sent shockwaves through the crypto market.
Hinesh Shah of Pinsent Masons said he was concerned crypto fraudsters were deliberately targeting inexperienced investors.
“Whenever times are tough, fraudsters always seek to prey on less experienced investors by promising huge returns. Given the huge sums which some crypto investors made during the boom, scams involving cryptocurrencies can be especially potent for smaller investors who may be desperate to make a ‘quick buck’.”
Pinsent Masons warned of a rise in “rug pull” scams, where crypto developers abandon a project and run away with investors’ funds.
Many of these scams are only coming to light now, the law firm said, as crypto values collapse and investors look to recover their savings only to find they have vanished.
The Financial Ombudsman Service warned the cost of living crisis could give rise to more vulnerable consumers falling victim to crypto fraud.
Around half of the investment scam complaints that the ombudsman receives involve cryptocurrencies.
Pat Hurley of the ombudsman said: “We are concerned that, as the cost of living bites, more people could be tempted to invest in speculative investments.”
He added: “Our advice to consumers is be wary and conduct their own research. If people feel they have been treated unfairly by their provider, they should contact the ombudsman, and we will see whether we can help.”