Australia’s national consumer watchdog in its yearly report has disclosed that Australians have lost more than AUD $2.1 million last year as a result of cryptocurrency-related fraud.
In its yearly ‘targeting scams’ report released on Monday, the Australian Competition and Consumer Commission (ACCC) reported an overall loss of an estimated AUD $340 million to fraudsters from 200,000 fraud reports put forward to the authority in 2017 with both figures hitting a new record.
A fraction of those overall losses is due to cryptocurrency-related fraud. Between January and September 2017, about $100,000 was reported by the ACCC on account of losses reported every month as a result of fraudulent activity in cryptocurrencies. Yet, the sudden increase in the value of cryptocurrencies in the Q4 of 2017 corresponded with a significant rise in fraud in the sector according to the ACCC.
A piece from the report explains that:
“As the value of actual cryptocurrencies increased, so too did the scam losses in what people thought were real investments. By the end of the year, reports of losses related to cryptocurrencies exceeded $2.1 million but as with other scams, this is likely the very tip of the iceberg.”
The total number of losses reported to ‘Scamwatch’, the ACCC’s fraud department, as the bitcoin price spiked close to $20,000 in December 2017 was above $700,000. In January, the average report losses had increased from $1,885 to $13,205 by the end of the year, according to the authority.
According to reports in November 2017, fraud activities related to bitcoin increased 126% within a week as there was growing interest by retail investors trying to invest in the cryptocurrency market.
The most common forms of fraud to be reported were fake initial coin offering (ICO) schemes and pyramid investment products.
‘[Crypto scams] capitalized on the general confusion about how cryptocurrency works and instead of people discovering how to directly buy cryptocurrencies, many found themselves caught up in what were essentially pyramid schemes,’ the ACCC added.
The ACCC noted that it received an overall of 1,289 public complaints this year related to cryptocurrency fraud in 2017.