Between April 2020 and March 2021, complaints about fraudulent cryptocurrency projects increased by 222%, according to the UK Financial Conduct Authority.
The UK Financial Conduct Authority (FCA) has published research results related to investments in various projects, including cryptocurrencies. The regulator said that in April 2020 it received 176 requests related to cryptocurrency fraud, and by March 2021 this number had grown to 566.
The agency suggested that this is partly due to the age of the investors. The FCA report indicates that people under 34 are more risk averse – 44% of their investments are in cryptocurrencies and 31% in crowdfunding. The FCA has listed the main risks inherent in investing in cryptoassets. First of all, we are talking about the lack of consumer protection and the unstable exchange rate of cryptocurrencies, because of which users can lose their invested funds.
The regulator’s report also says that search engines and social networks have begun to play an important role in the distribution of financial products and services. They advertise high-risk investment projects that may not be suitable for most investors. Advertising fraudulent cryptocurrency projects and materials with false information also put users at great risk. In addition, such projects may not fall under the jurisdiction of the FCA.
Due to the growing number of fraudulent cryptocurrency firms, the agency is wary of the digital asset industry. Therefore, the British regulator warned investors about the risks of investing in cryptocurrencies – if people invest in them, then they should be ready to lose them.
Recall that earlier the FCA banned Binance Markets Limited, the British division of the Binance cryptocurrency exchange, to provide some of its services to UK citizens. However, at the end of August, FCA reported that Binance had met the requirements.