Cryptocurrency scams are nothing new to the Blockchain community, but the rate at which they’ve been growing is astounding, especially in Australia, which has seen a nearly 200% increase just in 2018 alone.
In fact, 2018, was what I’d call a disaster for the cryptocurrency industry, as there were rampant scams going on left right and centre. ICOs either failed or turned out to be scams as well (80% of them actually). All of this pressure and negative information discouraged people in 2019 and during 2018 as well. But the punch that Australians took was the strongest of them all.
The 2018 Australian crypto disaster
Excluding all of the victims caught up in ICO scams in 2018, there were nearly 700 cases reported in Australia directly connected to cryptocurrency fraudsters.
All of the reports were made in ACCC (Australian Competition and Consumer Commission) and other government agencies. But the bulk of them were reported to the ACCC. According to the agency’s report, more than 6 million AUD ($4.3 million USD) was lost due to cryptocurrency scams by Australian citizens in 2018, which is about $1.5 million more than 2017 scam losses.
Where did the victims lose their funds?
According to the victims themselves, most of the losses occurred with false investment promises, where shady companies were offering Forex and stock trading opportunities to customers willing to pay via Bitcoin or any other cryptocurrency.
It was apparent that they were asking users to convert fiat money to Bitcoin at their local Bitcoin ATM and then transfer it to them. Thanks to the nature of the Blockchain, none of those transactions were able to be tracked and refunded as well. Once the payment was made, the companies would come up with excuses or just disappear completely.
Furthermore, according to Playamo, due to the gambling regulations in the country being severe to local operators, shady companies started to pop-up county-wide and offer various bitcoin casino games on their platforms. These companies would market themselves as foreign operators, due to the fact that local gambling sites weren’t allowed to cater to Australian customers.
All of this has contributed to Australians losing more than $345 million in cryptos as well as fiat currencies in 2018. That is more than a third of a billion! Which is simply gone from the country.
What can Australia do about this?
People are starting to criticize the government for not providing enough safety for the citizens in terms of financial investment platforms. But the research showed that more than half of people involved with cryptocurrency scams (the victims), were male, between the age of 25-34. This sent a message across the country that the financial education of the younger population is sub-par compared to other countries.
Due to this indicator, the Australian Government may implement an education program rather than revamp the regulatory framework. Due to the Blockchain being anonymous, it would be hard to implement an effective regulation in the first place. The speed of transaction is also a contributor as it usually happens within seconds or hours, therefore the victim cannot stop it or refund it once it’s in progress or finished.
The ACCC showed even more concern about the figures by saying that not everybody reports being scammed. Therefore the figures can be much higher, due to lack of reports or just people decreasing the amount lost in the first place.
Giorgi is a news reporter and financial analyst at www.forexnewsnow.com He has 3 years of experience in analyzing the financial markets of Forex and cryptocurrencies. He also likes making hidden jokes in his articles.