Protecting consumers from Cryptocurrency scams

by | Jun 2, 2023

In the past few months, the Australian government and regulators have placed a strong focus on protecting consumers from cryptocurrency scams, especially in light of the recent collapse of well-known crypto businesses.

One effective strategy to achieve this goal could be limiting Australians’ exposure to online scams. Social media sites like Facebook/Meta, Twitter, and YouTube are known to be hotspots for scams targeting unsuspecting individuals, particularly those with limited knowledge of investing.

It is common to see ads on these sites that use public figures, real or fake, to promote crypto assets that are supposedly endorsed by financially savvy individuals. Unfortunately, simply warning users about these risks may not always be enough. Some people assume that investments promoted on social media must be real.

This issue is not unique to cryptocurrencies. There have been instances where celebrities have been involved in legal disputes due to the unauthorised use of their names or images to sell products they don’t endorse. Dealing with cryptocurrency transactions can be particularly complex since they are instant, irreversible, and cannot be recovered.

How to spot scams

To help individuals recognise common scams and protect themselves, ASIC has created a checklist of scams and ways to avoid them.

  1. You receive an offer out of the blue.
  2. You see a celebrity advertisement that is actually fake.
  3. A romantic partner you only know online asks for money in crypto.
  4. You’re asked to pay for a financial service with crypto.
  5. You get pressured into transferring crypto from your currency exchange to another website.
  6. The app you’re using or directed to isn’t listed on the Google Play Store or Apple Store.
  7. You need to pay more to access your money.
  8. You are ‘guaranteed’ returns or free money.
  9. Strange tokens appear in your digital wallet.
  10. The provider withholds investment earnings ‘for tax purposes’.

Being aware of these warning signs can help individuals protect themselves and avoid falling victim to potential cryptocurrency scams. For more information, you can visit ASIC’s website.