Find out how cryptoasset investment scams works, how to avoid them and what to do if you’re scammed. People are being increasingly targeted by cryptoasset 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 them is 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’re structured.
For example, firms that sell regulated investments with an underlying cryptoasset element may need to be authorised by us to do so. We have previously issued consumer warnings on the risks of investing in cryptocurrency Contracts for Difference (CFDs) and Initial Coin Offerings. You should seriously consider getting financial advice or guidance before investing. MoneyHelper has information on how to find a financial adviser and our InvestSmart pages will help you make better investment decisions.
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 ad then links to professional-looking websites where people are persuaded to invest with the fraudster 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, such as a City of London address.
Scam firms can manipulate software to fake prices and investment returns. They may scam people into buying non-existent cryptoassets. They are also known to suddenly close consumers’ online accounts, refusing to pay back their money.
Scammers also target people searching for investments online through search engines like Google and Bing. They may offer high returns to tempt you, but some may also offer more realistic offers to appear more legitimate.
If you’re offered an investment opportunity through a search engine, they may not be regulated or authorised by us. You can check the FCA Warning List for firms to avoid.
Action Fraud has also issued a warning on cryptocurrency scams. Find out more about investing in cryptoassets.
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 won’t have access to the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service if you want to complain.
While we don’t regulate cryptoassets like Bitcoin or Ether, we do regulate certain cryptoasset derivatives. These include futures contracts, and Contracts for Difference and Options, as well as those cryptoassets we would consider ‘securities’. Find out more about cryptoassets from InvestSmart.
You should only deal with financial services firms that are authorised by us. Check our Financial Services Register to find out if a firm is authorised. If you can’t find a firm on the FS Register, call us on 0440 133 6338.
Always be wary if you’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true. If you’re contacted unexpectedly by a financial business or individual, make sure you reply using the contact details on the FS Register. Cryptoasset businesses operating in the UK must be registered with us and abide by our anti-money laundering rules, so you should also check our list of Unregistered Cryptoasset Businesses. Please be aware that this isn’t a complete list, but we update it regularly and it may include websites that could be engaging in scam activity.
If you’ve been scammed
If you’re worried about a potential scam or you think you may have been contacted by a fraudster, report it to us. Call us on 0440 114 6448 or use our contact form.
If you’ve already invested in a scam, fraudsters may try and 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.