Australia’s ASIC has issued a new warning about a growing wave of crypto investment scams spreading through messaging app groups focused on “share trading” and “stock tips.”
According to the regulator, scammers are increasingly using platforms like WhatsApp and Telegram to lure people into fake crypto trading schemes that appear professional and profitable on the surface but are ultimately designed to steal investors’ money.
The warning comes as the larger crypto market grapples with the rise of scams and hacks in the sector. According to recent media reports, $11 billion annually is lost due to crypto scams, with some estimates citing up to $17 billion lost globally when including broader platform frauds.
Modus operandi of the scams
According to ASIC, such scams typically start when the victim sees ads or posts on social media about trading tips and investment opportunities that guarantee rapid profit.
The victim would then be lured to participate in a messaging chat group where scammers would pose as successful traders, financial analysts, or known public figures for the sake of building their credibility.
At that point, users would be advised to trade using cryptocurrency trading websites that are controlled by scammers in private.
Most of those websites look extremely authentic. They will often show artificial trade operations, fake balances, and fabricated profits to convince investors that their investment is doing well.
However, ASIC cautioned that there was no real trading happening in the background. All information provided on such platforms was fake, and whatever amount the victim would deposit would go directly to scammers’ accounts.
Moreover, according to ASIC, such scams became more advanced at the moment when victims tried to withdraw their funds from the website.
ASIC emphasized that the money will never be recovered since the investments in question are non-existent and each new payment just goes into the pockets of the fraudsters.
It is important to note that the criminals use sophisticated tactics by focusing on the victims who had previously fallen prey to fraudulent investments, including “pump and dump” schemes.
The scammers contact the victims under the pretext of providing fund recovery services or offering legal assistance and then defraud the victims again through recovery costs.
ASIC’s previous warnings on crypto scams
According to ASIC, it has had reservations regarding the activities of coordinated pump-and-dump scams carried out via communication applications. This involves fraudsters inflating the value of relatively illiquid assets by convincing many individual investors to purchase such securities before offloading their positions at high costs. The process is fraudulent and has been on the rise lately among the use of social media and encrypted messaging services.
The notice arrives at a time when Australian youths remain highly enthusiastic regarding cryptocurrency trading.
Data from Moneysmart indicates that advertisements associated with cryptocurrencies have been abundant on social media sites used by Generation Z investors. A survey of 1,127 Australians within the age bracket of 18 to 28 years showed that 23 percent held crypto-related investments, which included cryptocurrencies and NFTs. Of these individuals, 66 percent were classified as speculators.
The results showed how much social media was shaping the investment decision process of young people. As many as 29 percent of participants claimed they engaged in short-term trading according to influencer advice. The same group revealed that more than 72 percent had seen crypto-related advertisements on the internet. In addition, more than 41 percent indicated that they were contacted and persuaded to invest in cryptocurrencies.
Together with the warning, the authorities provided an example of how such a scam looks in practice, for example, fake WhatsApp trading groups and messages, fraudulent crypto trading dashboard, which mimic real ones.
In their release, the Australian Securities & Investments Commission informed that any business providing virtual asset services in Australia needs to be registered with AUSTRAC and comply with its regulations against money laundering and terrorism financing.
The regulator recommended investors to make sure that a website is registered with AUSTRAC before transferring money.