Cryptocurrency scams soar via social media platforms

Social media hype is luring unsuspecting Australians into potential traps online.

Social media hype is luring unsuspecting Australians into potential money traps online, according to a new university study.

A study by the University of Queensland shows nearly 30 per cent of Queenslanders are buying into crypto via social media platforms, with little to no research substantiating their decision-making process.

Coast crypto analyst Sydel Sierra says first-timers can protect themselves from scams by following a few simple steps.

“Most people trust stocks, because stocks are regulated, they’ve been around for a long time,” she said.

Gold Coast crypto consultant Sydel Sierra has tips on how Gold Coasters can protect themselves from surging online crypto scams. Picture: Glenn Hampson

“But then they apply that same logic to crypto which is still a very new investment, it’s still a new technology people are getting into – and they think it’s 100 per cent trustworthy so they just go ahead and apply that same logic and end up getting burnt.”

Last year, the ATO reported more than $170m was scammed from hopeful investors looking to break into the crypto game. Ms Sierra said it was safe to assume a large percentage of what people saw on social media had the potential to be a scam.

“People trust these third parties – send us $10 and get $20 back, and all these sorts of things – that’s where people get really burnt,” she said.

“My advice is people start with the most popular coins and always have the cryptocurrencies in a wallet (a private interface to manage crypto) that you control.”

A visual representation of the digital cryptocurrency Bitcoin, at the "Bitcoin Change" shop in the Israeli city of Tel Aviv. Picture: Jack Guez/AFP

Known as the “crypto queen” Ms Sierra, who retired at 30 thanks to her skills in crypto trading, said most people buy cryptocurrencies and leave them sitting on an exchange or in the ownership of other people with the promise of some return.

The 35-year-old recommended avoiding automated trading.

“Anything that does automatic trading for you – trading bots, anything with celebrity endorsement or Twitter posts (or) things offering really over-promised returns,” she said.

“I always say, if it’s too easy – it’s probably a scam.

“If it’s too good to be true, it usually is and that’s where people get really caught up in the scams of crypto.”

**This story does not constitute financial product advice. You should consider obtaining independent advice before making anyfinancial decision.

Originally published as Cryptocurrency scams soar via social media platforms