UK losses from cryptocurrency fraud have increased by more than 40% over the past year, surpassing £300m for the first time, according to the UK Fraud Reporting Agency.
Law firms said the data provided by Action Fraud reflected the scale of cybercrime and last year’s high-profile collapse of crypto exchange FTX, which caused waves of losses among retail investors. .
According to the Office for National Statistics, cryptocurrency fraud is part of a wider fraud “epidemic”, accounting for more than 40% of all reported crimes in England and Wales last year.
Cryptocurrency fraud losses increased 41% to £306m in the 12 months to March 2023 from £216.5m in the same period last year, according to RPC, the law firm that collected Action Fraud’s data. It is said that
RPC partner Dan Wyatt said: “These numbers reflect both the impact of cryptocurrency fraud on UK investors and, more specifically, the devastating impact of the FTX bankruptcy on UK retail investors. It shows that,” he said.
£115.7m, more than a third of all cryptocurrency fraud losses that year, occurred in November 2022 when FTX filed for bankruptcy. The Bahamas-based business was valued at $32 billion less than a year ago.
Jennifer Craven, a fraud expert at law firm Pinsent Masons, said the numbers reflect how widespread cryptocurrency crime is.
“[The figures] This coincides with a surge in UK High Court lawsuits initiated by victims of cryptocurrency fraud determined to recover their losses through civil remedies,” she added.
Cryptocurrencies such as Bitcoin are largely unregulated in the UK. In February, the Treasury Department released a draft cryptocurrency regulation that includes new requirements for exchanges to ring-fence customer funds in the event of bankruptcy.
Lawmakers on the House of Representatives Treasury Select Committee last week regulated cryptocurrencies in a manner similar to the gambling sector, citing that they have “no intrinsic value, high price volatility, and no tangible social benefits.” said it should be.
RPC said the loss could also reflect the collapse of crypto-related Ponzi schemes that could no longer continue as the value of the underlying cryptocurrency plummeted.
Bitcoin, the oldest cryptocurrency, fell to $15,700 on November 10, 2022, the day before FTX filed for bankruptcy, according to cryptocurrency site CoinGecko.
The currency is currently valued at $26,200 per Bitcoin, down more than 60% from its November 2021 high of just over $69,000.
The UK government’s National Fraud Strategy, a blueprint for how to combat financial crime, released earlier this month promised to ban cold calls on all financial and investment products.
However, many companies said this strategy was not enough and called on online platforms, where many scams occur, to follow stricter rules.