Crypto scams are on the rise in the UK with the number of reports doubling last year amid an explosion of interest in digital assets.
A freedom of information request revealed the scale of the challenge faced by financial regulators with 6,372 crypto scams reported to the Financial Conduct Authority in 2021, up from 3,142 a year prior. Fraudsters are using new technologies to exploit the estimated 2.3m Brits who own crypto, many of whom invested in digital assets for the first time last year.
“Unfortunately there are some bad apples out there looking to take advantage of both individual and corporate investors,” commented Tim Mangnall, the chief executive of Capital Block, which conducted the research.
“Like many new and unregulated activities, investors of all sizes need experienced advice and guidance because there will always be a small number of people seeking to exploit a lack of knowledge and education among investors,” he added.
While the UK’s financial watchdog plays a limited role in regulating digital asset firms for money-laundering purposes crypto assets remain unregulated. Earlier this month the FCA revealed that over the past six months it has opened over 300 cases related to unregistered crypto asset businesses, many of which may be scams, while 50 investigations into unauthorised businesses are ongoing.
Mangnall accused companies of failing to do their due diligence when it comes to striking crypto partnerships opening the door to exploitation.
“You know it’s a tough, complicated sector when some of the world’s biggest organisations are jumping the gun, seeing it as a gold rush, and continuing to get Crypto wrong,” Magnall commented, referencing recent crypto partnerships by the football clubs Barcelona and Manchester City which have failed in recent months.