According to Britain’s Fraud Reporting Agency, UK losses due to crypto fraud have increased by more than 40% over the last year. They now exceed £300mn, a record high.
The data provided by Action Fraud reflects the extent of cybercrime and the collapse of the crypto exchange FTX, which was highly publicized last year, triggering a wave in retail investor losses.
Cryptocurrency Scams are part a larger “epidemic”, which accounted for over 40 per cent all reported crimes in England & Wales last year.
The losses from crypto fraud grew by 41 percent year-on-year to £306 million in the 12 month period ending March 2023, compared to £216.5 million the year before, according to the law firm RPC. They collected the data through Action Fraud.
Dan Wyatt is a partner at RPC. He said, “These numbers demonstrate both the impact of cryptocurrency fraud on UK investors as well as the colossal effect that the collapse FTX has had on UK retail investor.”
In November 2022, when filed for bankruptcy, more than a third (£115.7mn) of the crypto fraud losses occurred. The Bahamas-based company was valued at $22bn less a year ago.
Jennifer Craven is a fraud expert with Pinsent Masons. She said that the numbers showed how widespread crypto-crime had become.
She added, “[The figures] are in line with the sharp rise in civil actions brought by victims of cyber fraud to the English High Court who are determined by civil remedies to recover their losses.” In the UK, crypto currencies such as bitcoins are not regulated at all. The Treasury published draft proposals in February for the regulation and oversight of crypto assets. These included new requirements that exchanges ring-fence customer money in case of bankruptcy.
Last week, MPs from the Treasury Select Committee of the House of Commons said that cryptocurrency should be regulated similarly to gambling, as it has ” little intrinsic value and a high level of volatility in price.
RPC stated that the losses may also be a reflection of the failure of crypto-related Ponzi Schemes, which were unable continue due to the plummeting value of the cryptocurrency they were based upon.
According to CoinGecko, Bitcoin, the oldest cryptocurrency fell as low at $15,700 the day before FTX filed bankruptcy on November 10, 2022.
At the moment, bitcoin is valued at just under $26,200. This is down by more than 60% from its peak of over $69,000 reached in November 2021.
The UK’s National Fraud Strategy, released earlier this week, is a blueprint for how the government will crack down on financial crimes. It pledged to prohibit cold calling on all financial products and investment services.