UK Crypto Fraud Losses Up 40%

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UK losses from crypto fraud have soared by more than 40% in the past year, topping £300m for the first time, according to the UK’s fraud reporting agency.

The law firms said the data, provided by Action Fraud, reflects the scale of cybercrime and the high-profile collapse of cryptocurrency exchange FTX last year that triggered a spate of losses among retail investors.

Cryptocurrency the scams are part of a wider fraud “epidemic”, which accounted for more than 40% of all crime reported in England and Wales last year, according to the Office for National Statistics.

Losses from crypto fraud rose 41% year-on-year to £306 million in the 12 months to March 2023 from £216.5 million a year earlier, law firm RPC said, which collected the data from Action Fraud.

“These numbers show both the impact of crypto fraud on UK investors and, more specifically, the colossal impact the FTX crash has had on UK retail investors,” said Dan Wyatt, partner at RPC.

More than a third of the year’s £115.7 million crypto fraud losses occurred in November 2022, the month FTX filed for bankruptcy. The Bahamas-based business was valued at $32 billion less than a year earlier.

Jennifer Craven, a fraud expert at law firm Pinsent Masons, said the figures reflect how widespread crypto crime has become.

“[The figures] align with the sharp increase in English High Court actions brought by victims of cryptofraud who are determined to recoup their losses by civilian remedial means,” he added.

Cryptocurrencies such as bitcoin are largely unregulated in the UK. In February, the Treasury unveiled draft proposals to regulate cryptocurrencies, including new exchange requirements to protect client money in the event of a default.

House of Commons Treasury Select Committee MPs said last week that cryptocurrencies should be regulated in a similar way to the gambling sector, given that it had “no intrinsic valueenormous price volatility and no recognizable social good”.

RPC said the losses could also reflect the collapse of cryptocurrency-related Ponzi schemes which have been unable to continue as the value of the cryptocurrencies they were based on plummeted.

The value of bitcoin, the oldest cryptocurrency, dropped as low as $15,700 on Nov. 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 high of just over $69,000 in November 2021.

In the UK government’s National Fraud Strategy, a blueprint released earlier this month on how to crack down on financial crime, it pledged to ban cold calling on all financial and investment products.

However, many companies said the strategy didn’t go far enough and called for addressing online platforms, where many scams originate more stringent rules.