UK crypto fraud totalled £226m in 2021-22, with almost half a billion pounds being lost to scams over the past three years, according to data from Action Fraud
Cases of cryptocurrency scams have surged by almost a third this year as fraudsters continue to rake in hundreds of millions.
The value of UK crypto fraud hit £226m in 2021-22, up from £171m in 2020-21 and £71m the year before, the data from Action Fraud revealed.
Around 10,030 reports on crypto fraud were made in 2021-22, up from 8,676 the previous year.
Law firm Pinsent Masons, which obtained the information, said despite the decline of many cryptocurrencies, small investors were still being charmed by ‘get rich quick’ schemes.
Hinesh Shah, senior associate forensic accountant at Pinsent Masons, said: ‘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’.’
Many investors continue to lack the necessary skills and experience to tell a legitimate cryptocurrency investment from a fraudulent one, Shah warned.
Shah added: ‘People should always be cautious when they receive an unsolicited suggestion to invest, from sources which they don’t recognise. This is especially true when it comes to cryptocurrencies.’
The firm also warned of ‘rug pulls’ where developers of tokens steal funds raised from investors and ‘pump and dump’ scams where they create excitement around an asset and sell their holdings when the price rises, leaving investors exposed to any falls in value.
In addition, there are fraudulent initial coin offerings, where a new token being launched does not exist.
This follows after the collapse of the cryptocurrency exchange FTX and the resignation of its founder, Sam Bankman-Fried.
The crypto exchange, which was valued at $32bn (£26bn), filed for bankruptcy after a surge in withdrawals saw an $8bn black hole in its finances.
FTX currently owes around $3.1bn (£2.6bn) to its largest creditors after allegedly using customer funds to prop up its losses.