The watchdog has seen a rising number of cases, with fraudsters often advertising on social media, claiming celebrities have made significant sums investing in digital currencies, such as Bitcoin and Ether. Consumers should be wary of such claims.
It’s important to remember that crypto-currencies aren’t regulated by the FCA, so there’s no way of getting your money back if things go wrong, and you can’t ask the Financial Ombudsman for help.
Unlike conventional currencies, cryptocurrencies are created and stored electronically, so there are no printed notes or minted coins. Prices can be volatile, with rapid gains and losses. The value of a bitcoin, for example, rose from just over £3,000 in October 2017 to more than £12,500 by January 2018. However, the following October it was down to around £4,700 again.
Such short-lived but rapid price rises have helped fuel these scams. Investors should be wary of any investments that promise ‘too good to be true’ returns, particularly if they are contacted out of the blue, or pressured to invest quickly.
The value of your investments, and the income from them, can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.