By Evan Spicer
Director of Cryptocurrency Investigations
The Financial Conduct Authority has issued a spate of warnings about unauthorised crypto assets, screen sharing frauds and clone firms. The steady increase in suspicious financial activity online prompted the flood of warnings which include largely unregulated assets on the blockchain, such as cryptocurrencies and NFTs.
NFTs Compound the Crypto Conundrum
Cryptocurrencies were the first phase of crypto-assets. NFTs or non-fungible tokens provide opportunities to buy, sell and trade unique items and preserve intellectual property on the blockchain.
However, the unregulated nature of cryptocurrencies and NFTs means that the public has no guarantee from regulators such as the FCA that funds can be returned if bitcoin transactions go awry. Even as the UK government and legislators worldwide consider legislation that could place crypto assets under the umbrella of regulation, the FCA issued a statement reminding the public that, as of yet, it doesn’t regulate crypto assets.
The FCA also sent a warning to the Advertising Standards Authority to include disclaimers on its cryptocurrency and NFT advertisements that these assets are not subject to FCA regulation. Particularly concerning for the regulator are unrealistic promises by former footballer Michael Owen on Twitter that the cryptocurrency he’s promoting can’t lose its value.
As was witnessed during the recent cryptocurrency selloff, any type of asset can lose its value and the FCA is concerned about false guarantees made about unregulated assets.
The FCA Alerts the Public About Screen Sharing Schemes
The FCA also recently issued an admonition about screen sharing scams, which have grown 86% since 2021 and robbed the public of £25 million in the past year alone. Screen sharing schemes involve a fake IT professional or broker building false trust with a client and asking them to give them screen sharing capabilities. Once they have accessed the victims’ accounts, they can steal data, financial information and cryptocurrency codes.
The cyber criminals often pretend to work in the IT department of the victim’s company or say they represent Microsoft and claim they need to make a repair on their device. Others are unlicensed brokers who offer sham trading assistance services and ask for access so they can trade on behalf of clients. In these cases, the person giving access is robbed of their funds and sensitive data.
False Identities and Sham Services–Clone Brokers
The FCA named a multitude of brokers identified as ‘clone firms.’ These are fake financial services that adopt names similar to brokers regulated by the FCA. The aim is to mislead the public and to make them believe they are trading with an FCA-authorised financial service. They frequently contact target victims out of the blue, often by cold-calling or WhatsApp spamming and urge them to get involved in risky trading.
What to Do If You Have Lost Money to an Unauthorised Financial Service?
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