Cryptocurrency is a digital asset that can you trade or exchange online. It's grown in popularity in recent years and some investors see high returns.
But investing in cryptocurrencies is high risk because they’re not regulated.
They’re not protected by the UK's Financial Services Compensation Scheme (FSCS). Most crypto asset exchanges are registered with the Financial Conduct Authority (FCA) but they're not authorised or supervised by the FCA.
Here’s the story of one HSBC customer who fell victim to a cryptocurrency scam. The details are fictitious but are based on a genuine case. We've changed all the names, locations and other aspects to protect the anonymity of the people involved.
Melissa had banked with HSBC for 11 years and had never tried her hand at investing before.
She followed a well-known influencer on social media, who portrayed himself as a successful businessman with a focus on promoting investments.
This piqued her interest. When she got in touch with him directly online, he persuaded her to start investing in cryptocurrency.
Nothing appeared unusual or suspicious at this point.
The influencer seemed successful and had persuaded other people to invest in similar opportunities.
First, the influencer told Melissa to open an account with a cryptocurrency trading platform to get started.
She also provided the influencer with access to the new account so he could help manage her investments.
Melissa made payments from her HSBC account to her new cryptocurrency account, so she could trade.
The influencer contacted her regularly over 13 months with investment advice. He led her to believe her investment was growing in value. This is something fraudsters do to maintain trust. In that time, Melissa made 160 payments amounting to more than £300,000.
Melissa said: "I actually sold many of my assets to help fund these payments because he kept telling me that I would make significant returns on these investments."
Promising high returns is a common method that fraudsters use to convince customers to invest more.
Many of these payments triggered our fraud detection mechanism. As a result, we made several calls to Melissa to discuss the payments.
However, the fraudster had coached Melissa into how to respond to these calls. Again, it's a common technique that criminals use to try to stop banks from spotting fraud.
Melissa finally found out she'd fallen victim to a cryptocurrency scam when she spoke to a family member about her investments. They searched online for the influencer and the supposed investments. That's when they realised he wasn't legitimate and there were a number of scam warnings.
By the time Melissa reported it to us, the fraudster had already moved the funds out of her account and her money was gone.
Explore: Latest scam warnings
Fraudsters will try to tempt you into investing in cryptocurrency by:
What you should do:
