Saturday, March 14, 2020

FCA issues warning to avoid coronavirus-linked digital asset scams

 



Just like there always have been, scams are found in the digital currency space. There will always be those who are too inept to make a decent living and want to take advantage of situations in order to line their own pockets. As the coronavirus has gripped the world, there's no doubt that it is being used as a tool for initiating fraudulent activity, and the U.K.'s Financial Conduct Authority (FCA) has issued a warning to remind individuals to use caution when approached about making investments related to COVID-19.

In a message posted by the FCA on its website this past Wednesday, the financial watchdog explains, "Watch out for scams related to coronavirus (COVID-19). These scams take many forms and could be about insurance policies, pensions transfers or high-return investment opportunities, including investments in cryptoassets."

As is often the case, the potential scams will offer investment opportunities that are too good to be true, which should be the first sign for individuals to stay away. The FCA adds, as it has warned in the past, "If you decide to invest in something offering a high return or in a cryptoasset, you should be prepared to lose all your money."

The scams could come in many styles – requests for donations to the World Health Organization or the Centers for Disease Control and Prevention, or as a means to prepare for a rebound once the markets begin to recover. Common sense dictates that any investor perform his or her due diligence before making any type of investment, and understand the source of the request before turning over any funds.

Fortunately, digital asset enthusiasts have grown accustomed to potential scams and don't fall for the tricks as easily as may have once been seen. According to the National Fraud Intelligence Bureau in the U.K., those COVID-19 scams that have already been seen haven't had a lot of success. However, conventional investment scams in the U.K. tied to the virus have reportedly been able to collect more than £800,000 (a little more than $1 million).

The FCA recommends that individuals stay away from offers that appear out of the blue and to ignore investment opportunities that pop up on social media. It also suggests calling back those individuals who make contact looking for investments and to never provide any personal detail under any circumstances. In addition, before making any type of investment, consumers should check the FCA's register and its official Warning List to see if the entity is legitimate. If the company isn't listed in the register, don't hand over any money. The extra five minutes taken to do the research can help individuals avoid massive financial losses and headaches.

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