Victorians ‘bamboozled’ out of $22m in cryptocurrency scams

Experts are warning investors to do their research after the state lost millions to cryptocurrency scams. Here are the “red flags” to watch.

Victorian’s lost an estimated $22 million to cryptocurrency scams in 2021 as experts warn investors to do their research.

Australians reported $99 million lost to cryptocurrency investment scams over the past year, according to the Australian Competition and Consumer Commission – a 550 per cent increase on 2020.

While the ACCC doesn’t collect cryptocurrency scam data at a state-level, 56 per cent of all investment scams in 2021 were tagged cryptocurrency.

Investment scams have doubled year-on-year in Victoria since 2019, with residents reporting $39.5 million lost in just the last year.

About $22 million of that figure can be attributed to cryptocurrency investment scams.

This trend is continuing in 2022, 301 reports of investment scams totalling $9.6 million have already been received for January and February – at an average loss of more than $30,000.

RMIT Blockchain Innovation Hub cofounder associate professor Chris Berg.

RMIT Blockchain Innovation Hub co-founder, associate professor Chris Berg said scammers had turned to cryptocurrency because the technology was poorly understood and fashionable.

“Everyone has seen the press stories about people striking big in crypto and they want that chance,” he said.

“It‘s a complicated technology, poorly understood by the majority. Which means it’s easy to bamboozle potential investors.”

While cryptocurrency scams may be a developing issue for investors to be wary of, the methods employed by scammers are not new.

Assoc. Prof. Berg said most scams were using techniques which have been around for a long time, just updated with a “crypto facelift”.

“One of the most common scams we’re seeing is someone receiving a call out of the blue with an offer to help them invest in Bitcoin or something similar,” he said.

“It’s not sophisticated but they (scammers) can reel in big money. There’s nothing new about it.”

He said a “red flag” investors should look out for is asking themselves how they came across the opportunity.

“The real scam risk is when someone says they’ll walk you through how to do it,” he said.

“Ask yourself what are they getting out of it?”

Police in Victoria are taking the threat seriously, last year an overhaul of Victoria’s Crime Command saw the establishment of a Cyber Crime Division and a Crypto Currency Unit.

Last month, the ACCC even launched legal action against Facebook owner Meta for publishing scam crypto currency ads featuring well known Australians.

The consumer watchdog claims the ads have resulted in Australian’s losing hundreds of thousands of dollars, alleging the company did not take sufficient action to address the issue.

ACCC deputy chair Delia Rickard warned scams were more prevalent than ever as scammers capitalise on interest in cryptocurrencies.

“Be wary of investment opportunities with low risk and high returns. If something sounds too good to be true, it probably is,” she said.