According to the Australian Competition and Consumer Commission (ACCC), the use of cryptocurrencies in scams surged by 190 percent year-on-year. In 2018 the number of cases where scammers were paid in crypto reached 674.
On the other hand, losses in 2018 totaled $6.1 million versus the $2.1 million that was reported in 2017. The use of crypto, and other out-of-the-mainstream methods, in fraud is necessitated by anti-scam measures used by financial institutions. This is according to ACCC’s deputy chair, Delia Rickard:
Scammers increasingly ask for money via iTunes cards, Google Play cards and cryptocurrencies to avoid the anti-scam measures employed by banks and money laundering detection systems.
Scammers cash in on the 2017 crypto bull run
In the run-up to bitcoin and other cryptocurrencies reaching record highs in late 2017, cryptocurrency investment scams also increased ‘quickly and dramatically’. Per ACCC’s Scam reporting platform, Scamwatch, many would-be investors were enticed by the hype and excitement that had been generated.
However, ‘when they tried to cash out, the scammers either made excuses or were no longer contactable’.
Besides victims investing in bitcoin scams, fraudsters also encouraged targets to pay in cryptocurrency when investing in other opportunities. This included trading in forex and commodities. In this regard, Australians lost approximately $2.6 million this way.
Millennial males – the young and the vulnerable
Per the ACCC, nearly 50 percent of the losses incurred while paying in crypto to the scammers were borne by men aged between 25 and 34. This is no surprise since various studies done globally show millennial men are one of the most crypto-literate demographics.
In 80 percent of the scams involving cryptocurrency, victims reported that they had been contacted via the internet. This could have been through email, via an online forum or a social networking site.
Think crypto is evil? Meet fiat
True, Australia has seen a significant increase in the number of scams involving cryptocurrencies and the amount being reported lost. However, the amount that was lost in fiat currencies dwarfed that lost via crypto by a huge margin.
News: Scams cost Australians half a billion dollars https://t.co/1MAXftYr8H
— ACCC (@acccgovau) April 28, 2019
The total amount of financial losses amounted to approximately $489.7 million. With cryptocurrency losses amounting to $6.1 million, this is only 1.25 percent. It remains to be seen whether with growing adoption the level of cryptocurrency use in scams will increase proportionally.
About The Author
After words, numbers are my other love… mostly when they are going up and they have nothing to do with taxes or expenses. That makes green my favorite color!