Crypto has hit the mainstream in Australia. You’re hearing about it in the office, down the pub, and it’s flooding your social feed.
The fact that few people truly understand how crypto works and what drives its value means it’s fertile ground for scammers and fraudsters.
The Australian Federal Police reported that crypto scams increased significantly during the COVID-19 pandemic, with The Australian Competition and Consumer Commission recording a 172 per cent increase in losses between January and November 2021, totalling $109 million – and they’re only the ones we know about.
What to look out for
The bottom line is that there’s no such thing as free money. So, if something sounds too good to be true, it probably is. Here are a few tell-tale signs to look out for:
- Ponzi or Pyramid schemes: Will promise a regular return on investment when in reality, no real investment exists.
- Crypto flipping: Will claim to double your money overnight if you pay an initial start-up fee to exchange coins for money.
- Offshore brokers/investment sites: Companies promising big returns on a small deposits with little risk.
- Large account release: After an initial investment, scam sites may show a large balance that they have accumulated by ‘investing’ or ‘trading’ an initial deposit. They’ll then ask for more money before they can ‘release’ the funds.
- Anydesk: A broker or advisor asking you to install a screen sharing software, particularly ‘Any Desk’, is almost certainly a scammer. No genuine company needs to see your desktop screen.
- Blockchain scam: Don’t trust anyone asking for a ‘release fee’ to give transfer a large amount of cryptocurrency they’ve ‘found’ on the blockchain.
- Recovery services: Cryptocurrency transfers cannot be reversed. Any recovery service that asks for money upfront is a scam and should be avoided.
Protecting yourself and your investment
As with any investment decision – it’s essential to take the time to do your research, understand the market and the risks, and take steps to protect your investment.
Despite the fact that almost 1 in 5 Australians own some type of cryptocurrency, there’s currently little formal regulation of crypto trading in Australia.
This is likely to change following the October 2021 Senate Enquiry recommendations to set up more formal licensing and regulation. Regulation will encourage the establishment of digital assets businesses in Australia while also better protecting Australian consumers.
Following this, in what was a significant step towards integrating crypto-assets into Australia’s financial ecosystem, the corporate regulator, the Australian Securities and Investment Commission (ASIC), introduced licenses for crypto-asset holders.
ASIC also paved the way for Bitcoin and Ethereum-backed investment funds to begin trading on the Australian Securities Exchange (ASX) and the Chi-X exchange, providing investors with new and different investment options.
Achieving exposure to crypto assets via an exchange-traded fund is another way investors can access crypto via an institutional vetted platform without wearing the potential risks associated with directly holding crypto.