Cryptocurrencies are more popular than ever and, unfortunately, crypto scams are just as trendy. The government of the UK decided to try to put a stop to it, and cracking down on crypto has become a regular thing in the US, China, and many other countries. The decentralized and unregulated nature of digital coins represents an opportunity but also a risk.
Most crypto scams need darkness to work, targeting individuals through phishing emails or fake websites. Other crypto scams hide out in the open. They use advertisements to reach a large number of people, even popping up on popular search engines and appearing as though they are legitimate. Crypto wallet ads and crypto services ads have taken over the billboards of most large cities, including those in the UK.
The UK government officially announced a crackdown on crypto ads that mislead the public. The announcement comes days after Spain forced all crypto ads to include warnings of risks of monetary losses in their content. The UK government has done its homework. Its new detailed research shows that while crypto interest is rising, some users are being misled. UK warned that all crypto ads must now pass through the tight controls and regulations of the FCA Financial Conduct Authority.
The Scams, The Gamble, And The Informed Investment
There are many crypto scams. Pump and dump scams are those where a group of people promotes a new crypto token to inflate its price. When the price reaches a high peak they dump massive amounts of their coins causing the price to collapse. Phishing scams use fake emails or fake sites to try to hack users to strip them blind. Ponzi or pyramid schemes involve recruiting people and paying off gains to others. ICO scams, Rug Pulls, and Exit Scams are unique to the crypto world. In these styles of scams, a new crypto coin or new project is promoted but either abandoned immediately after launch or may never even see the light of day.
High commission sites, non-transferable wallets, fake wallets, and promotion of volatiles without warnings are other classic crypto scams. Day trading and short trades, with automatic stop loss and take gain options, are almost never a good idea in crypto. For many crypto investors, the most common strategy is known as HODL, short for "Hold On for Dear Life." Users buy into known crypto on trusted sites that offer saving percentages. HODL is about buying no matter what the price does and refusing to sell. Users are saving in digital coins to reap benefits in the long term, usually over one or more years.
But in the UK residents may not have all the information available. Research shows that just 38% of UK crypto buyers think that their transactions represent a possible risk and regard them as “gamble.” Consumers are using their own disposable income to buy and 29% check their wallet balance every day. Half of UK crypto users say they will buy more and assure they “know they’ll make money at some point.” These are behaviors associated with gambling. “It’s important that consumers are not being sold products with misleading claims,” the Chancellor of the Exchequer, Rishi Sunak says.