New Report Calculates Money Lost to Crypto Scams in Australia Last Year

Australian consumers lost approximately $2.1 mln to cryptocurrency scams last year, according to the Australian Competition and Consumer Commission’s (ACCC) annual scams report published May 21.

The ACCC’s analysis reveals that the use of digital currencies as a payment method in scams peaked in the last quarter of 2017. Almost $100,000 was reported lost per month to cryptocurrency-based scams from January to September, while in December, reported losses exceeded $700,000. The average reported loss in December had soared to $13,205 from $1,885 in January.

Among major means of deceiving users, the Commission highlighted fake initial coin offerings (ICO), pyramid schemes, and ransomware payments:

“... instead of people discovering how to directly buy cryptocurrencies, many found themselves caught up in what were essentially pyramid schemes. A number of reports showed that victims entered into cryptocurrency-based scams through friends and family who convinced them they were onto a good thing, a classic element of pyramid schemes.”

The ACCC indicated that the figure was influenced by the surging value of cryptocurrencies at the end of the year, saying “as the value of actual cryptocurrencies increased, so too did the scam losses in what people thought were real investments.” Still, the $2.1 mln in total losses was regarded to be conservative, as “with other scams, this is likely the very tip of the iceberg,” the report said.

In the beginning of May, Australia’s Securities and Investments Commission (ASIC) said that it was “taking action” to protect consumers in the ICO space. ASIC was delegated powers to intercede where it judges that an ICO is “misleading” investors, or else engaging in potentially unlicensed conduct, even when the ICO in question “does not involve a financial product.”

In March, Japan’s National Police Agency (NPA) published statistics on cryptocurrency-related scams in 2017. It said that more than $6.2 mln in digital currency was lost due to fraud and theft, however this figure doesn’t include the over $500 mln hack of NEM from crypto exchange Coincheck in late January.