The Australian Securities and Investment Commission (ASIC) has identified a sharp rise in investment scams during the coronavirus pandemic and has singled out crypto-related fraud as a particular concern.
Between March and May 2020, investment scams of all types have reportedly risen by 20% as compared to the same period in 2019, according to ASIC’s announcement on June 24.
Criminals appear to be attempting to take advantage of the economic insecurity that many citizens are facing during the crisis. ASIC’s executive director for assessment and intelligence, Warren Day, warned that scammers are “using age-old tactics in new and sophisticated ways to target people.” He added:
“ASIC is particularly concerned about the risk to consumers and investors losing money when buying into fake crypto-assets. Most crypto-asset investment opportunities reported to ASIC appear to be outright scams and there is no actual underlying investment.”
Funds lost to scams may be hard to recover
While reports of scams have provided the watchdog with “valuable intelligence,” the announcement cautions readers that it is difficult to catch fraudsters — particularly those operating overseas. Consumers and investors may be unable to recover their lost funds because of this.
Nonetheless, ASIC urges victims to come forward with their reports of financial and investment scams.
Typical features of suspect schemes include a range of presented investment offers that sound “safer than they are,” requests to pay money to individuals or firms that use multiple or constantly changing bank accounts, fake endorsements from celebrities or public agencies, including ASIC itself, and ploys circulated via online dating sites.
Fear and uncertainty
ASIC is not the first international government agency to voice concern over the apparent uptick in cryptocurrency-related fraud during the COVID-19 crisis. Since the start of the pandemic, the United States’ FBI, the United Kingdom’s Financial Conduct Authority and regional councils, and the U.S. Commodity Futures Trading Commission have all issued warnings about scammers’ attempts to capitalize on the climate of fear and uncertainty.
Nonetheless, data from blockchain forensics firm Chainalysis published in April indicated that the average value of transactions received by the wallets of identified crypto-related scams fell 30% during March.
Chainalysis attributed this in part to the impact of the mid-March crypto market collapse, and argued that concerns surrounding COVID-19-themed scams may be over-exaggerated.