The Financial Advisory and Intermediary Services Ombud (FAIS Ombud) is urging consumers to exercise caution when investing in cryptocurrency. With the increasing digitization of the world and the growing popularity of these innovative financial instruments in South Africa and worldwide, consumers may be at risk of falling victim to scams and fraud.
Since the Financial Sector Conduct Authority (FSCA) announced its regulation of cryptocurrency, the Financial Advisory and Intermediary Services Ombud (FAIS Ombud) has seen a slight increase in complaints lodged with its Office.
Consumers are advised to exercise caution to try and minimize the risk of falling victim to cryptocurrency scams. Some of the key aspects to look out for when looking to invest in cryptocurrency related investments include:
- Before using a cryptocurrency exchange, check its authenticity, for example, by reading reviews, as fake exchanges can look genuine but are run by fraudsters who want to steal your money.
- Watch out for scammers who use malware or hacking to gain access to investors’ accounts to steal their cryptocurrency.
- Be cautious of unsolicited offers or cold calls that promise high earnings or guaranteed returns.
- Be wary of individuals or entities who demand upfront payment or ask for access to your bank account information.
- Be mindful of fraudulent schemes that use fake websites or emails to trick investors into revealing their login information or secret keys.
- Be on the lookout for fraudsters who spread false or misleading information about a cryptocurrency to artificially inflate its price and then sell its own holdings at the inflated price, leaving other investors with worthless coins.
- Avoid scammers who create fake social media profiles or pages to promote their scams and lure investors into fraudulent projects.
- Be aware of SIM swapping scams, where scammers use a victim’s phone number to gain access to their cryptocurrency accounts to steal their funds.
