The amount of money reported lost to cryptocurrency fraud in the UK hit £24.3m last year (year to March 31 2019), a 256% rise on the £6.8m the previous year according to the accountancy and business advisory firm BDO LLP.
The number of reports made to Action Fraud, the UK’s national fraud reporting service, about cryptocurrencies also increased, up to 1,484 in 2018/19 from 562 the previous year.
Andrew Jacobs, Partner at BDO, said: “The surge in the amount of money lost as a result of alleged cryptocurrency fraud shows the inherent dangers that arise when innovation outpaces regulation.”
“When a new asset class or financial product is launched in a short space of time, there is a latency in regulated and consumer education. This is when some parties may take advantage and cut corners.”
“Unfortunately, history shows that some people do lose money in that period before all the loopholes can be closed.”
“There were just five fraud reports in Q1 2014/15, but that has ballooned to 493 in Q4 2018/19, which reflects the explosion of crypto assets and the speed at which they can be marketed in the internet age.”
“With the potentially large rewards of cryptocurrencies come substantial risks and much volatility, which some promoters have not always made clear.”
“The rise of the likes of Bitcoin and Ethereum has attracted investors in as they try to ride the cryptocurrency wave.”
“The vast majority of the cryptocurrency market welcomes greater regulatory scrutiny from the FCA, as it will lead to far better protection for investors and, ultimately, crypto assets have the potential to change for the good how we approach paying for goods and services.”
