Cryptocurrency scams linked to fake celebrity endorsements are flooding social media networks.
Consumer watchdogs are warning investing in Bitcoin and Ethereum is risky as foreign crooks are advertising get-rich-quick money-making schemes to lure unwary investors.
One scam is hiding behind bogus endorsements from TV’s Dragon’s Den millionaires.
Facebook has seen a flurry of adverts for the so-called Bitcoin Loophole, also promoted online as Bitcoin Trader, Bitcoin Code and xTraderFX platforms promising to whip up a fortune in a few days.
But official UK investment watchdog the Financial Conduct Authority has investigated the scheme and declared the scammers behind the adverts are illegally trading.
Illegal Bitcoin trader
“This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation,” said the FCA.
Online sites linked to social media advertising claim (Link to scam site) two anonymous university friends pitched their cryptocurrency business to dragons in Ireland and the UK.
In the UK, say the scammers, the businessmen asked for £200,000 investment and were offered £2.5 million by technology tycoon Peter Jones after demonstrating how quickly they could make money from Bitcoin.
The advertising is fake and investors who staked £250 in the scheme complain they have made no profits and cannot get any refund from the scammers.
“It’s a complete scam and my legal team are on the trail of these scammers,” said Peter Jones, who says any online money-making advertising referring to him is fake.
How the bogus schemes work
“Cryptocurrency fraudsters tend to advertise on social media – often using the images of celebrities or well-known individuals to promote cryptocurrency investments. The ads then link to professional-looking websites. Consumers are then persuaded to make investments with the firm using either cryptocurrencies or traditional currencies,” says the FCA.
“Scam firms can manipulate software to distort prices and investment returns. They may scam people into buying non-existent cryptocurrencies. They are also known to suddenly close consumers’ online accounts and refuse to transfer the funds to them or ask for more money before the funds can be transferred.”
The FCA also cautions few cryptocurrency traders are regulated and most are based overseas, which means investors have no way to reclaim any money they lose.