Of this figure, the ACCC reported, consumers lost approximately USD 100,000 per month between January and September of 2017. These losses increased in December to USD 200,000 when Bitcoin price rose to nearly USD 20,000, recording losses of more than USD 700,000. The commission noted that these figures showed a correlation between the number of scams and the price of Bitcoin.
The common cause of consumer losses was due to scams involving fake ICOs, cryptocurrency pyramid schemes, and ransomware payments.
Although the figure is high, it was noted that scams overall last year Australians lost more than USD 340 million, with USD 64 million being lost to investment scams specifically last year.
Cryptocurrency fraud is by no means limited to Australia, with fraud occurring in all countries which have a crypto market. In North America, seven scams and hacks last year netted around USD 490 million of consumer funds for the criminals. The Wall Street Journal has reported that of the 1,450 ICOs it reviewed, 271 had “red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams”.
The North American Securities Administrators Association (NASAA) has launched its own task force to attempt to clean up the crypto space in the US and Canada, primarily by conducted thorough investigations of ICOs and cryptocurrency related products, according to CoinDesk.
The investigation, labeled ‘Operation Cryptoweep’ according to statements, has involved to date “nearly 70 inquiries and investigations and 35 pending or completed enforcement actions since the beginning of the month”.
The Texas State Securities Board (TSSB) conducted its own survey on cryptocurrency crime recently in an investigation involving 32 cryptocurrency investment plans over four weeks. The report indicated that almost two-thirds of these promoters did not give investors a physical address and that five out of the 32 promoters did not disclose any investment risks, as well as the risk of cybersecurity threats and hacks, and instead simply promised gains of up to 40% every month.
Joseph Rotunda, the TSSB’s Enforcement Division director, commented that “the market for cryptocurrency investments is saturated with widespread fraud, and our work is only revealing the tip of the iceberg”.
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