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Consumers Lost $1.6M To Crypto Fraud In Australia

Sydney

Cryptocurrency-related fraud cost Australians over $1.6 million in losses last year, according to a new report by the Australian Competition and Consumer Commission (ACCC).

During the first nine months of 2017, around $75,000 worth of cryptocurrency was stolen or hacked every month. But the real kicker was last December when a total of $520,000 was lost to scams affecting cryptocurrency users.

ACCC said it received a total of 1,289 public complaints related to cryptocurrency scams in 2017. Fake or suspicious initial coin offerings (ICOs)--the crypto version of the IPO—were the most common trap for unsuspecting consumers, with crypto schemes such as pyramid investment schemes purporting to be crypto-investment products cited as the top fraud category.

The Commission said it expects crypto-related fraud to continue, noting, "as with other scams, this is likely the very tip of the iceberg."

The agency also revealed accumulated total losses of some $256 million (from non-crypto) to scammers from 200,000 scam reports submitted to the authority. However, crypto scams were the headlining news due to the digital currency volatility and the ‘fear-of-the-unknown’ factor.

While the Australian numbers sound dire, the total lost to crypto fraud represents only a small portion of money scammed out of consumers in crypto-related projects last year globally.  

Elsewhere, last year, just seven major scams resulted in the loss of around $490 million in consumer funds. In March, SafeHaven reported on five of the worst ICO scams of last year.

Last week, The Wall Street Journal reviewed 1,450 ICOs and found that 271 had "red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams."

In United States, the SEC has recently hinted at a crackdown on ICO’s, which is a relatively new field that has not seen a lot of regulation Related: The Bitcoin Miner Eyeing A $1 Billion IPO

In one year only ICO proceeds have surged almost 40-fold, from $96.3 million in 2016 to almost $4 billion last year. More than 180 new ICOs are scheduled to launch in 2018, beyond the radar of the regulators.  

The authorities worldwide had previously issued warnings about the involvement of celebrities in Initial Coin Offerings (ICOs), the cryptocurrency equivalent of IPOs. In recent months, celebrities such as actors Jamie Foxx and William Shatner, boxer Floyd Mayweather and hotel heiress Paris Hilton, among others, have publicly endorsed several projects ahead of token sales.

Actor and Zen master Steven Seagal endorsed dodgy cryptocurrency called Bitcoin, which was targeted by US regulators in March.

In order to raise awareness about ICO scams, a new website emerged recently, HoweyCoins, calling for investors to fund in new ICO. The twist is that the website is run by SEC itself and is meant to show people how easy it is to fall for an ICO scam. Those who clicked on the “Buy Now” button are greeted with a warning.

The SEC said they used the same language used by many ICO promoters and noted how easy it was to whip up the fake website.

On a more serious note, US and Canadian regulators have launched 70 investigations into cryptocurrency scams and fraudulent initial coin offerings as part of a called “Operation Crypto Sweep.”

By Jan Bauer for Safehaven.com

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