A surge in cryptocurrency scams has prompted the New Zealand’s Financial Markets Authority (FMA) to issue a stark warning about fraudulent investment schemes spreading via social media platforms, particularly YouTube, WhatsApp, and Telegram.
Scammers are using YouTube channels to offer fake cryptocurrency trading advice, enticing viewers to join private groups on WhatsApp or Telegram.
These groups promise lucrative investment tips, exclusive prizes, and expert guidance.
Once victims are hooked, the fraudsters gain their trust and direct them to fake trading platforms designed to look like legitimate cryptocurrency exchanges.
The scammers start by convincing users to make small investments, making it appear as though the platform is legitimate by showing fabricated profits.
However, as victims grow more confident and invest larger sums, they are hit with demands for extra fees whenever they attempt to withdraw funds, with no money ever being returned.
The FMA has flagged over 40 suspicious websites that are part of these scams.
These fraudulent platforms, including bi-investments.com, phoenix-trades.com, and bricsinvestlimited.com, have been meticulously designed to mimic genuine cryptocurrency trading sites.
Scammers continue to manipulate their victims, relying on the appearance of legitimacy to build trust and secure higher investments.
Messaging platforms, particularly WhatsApp, have become a hotbed for these scams.
Fraudsters are now bypassing more traditional means of communication, reaching out directly to potential victims on their phones.
Finance Magnates recently reported that scammers use WhatsApp to promote unauthorized investment schemes, relying on personal interaction to deceive unsuspecting traders into joining fraudulent platforms.
A survey conducted with 631 traders found that 60% reported losses due to scams on Telegram, while WhatsApp wasn’t far behind with nearly the same percentage.
Other platforms like Facebook, Instagram, and SMS also showed significant risks, with 56%, 51.8%, and 50% of respondents respectively suffering losses.
Even slightly safer platforms like X (formerly Twitter) and LinkedIn had troubling results, with 43.7% and 45.4% of users reporting losses.
Celebrity Endorsements Fuel the Fraud
The FMA has also highlighted another worrying trend: fraudulent investment ads that use fake celebrity endorsements.
Scammers are leveraging the public's trust in famous figures by using their images in social media ads to add credibility to their fraudulent schemes.
These fake ads are often accompanied by fabricated news articles that appear to be sourced from reputable media outlets, creating a false sense of security for potential victims.
In May 2024, the FMA issued a warning about scams that involved fake celebrity endorsements, particularly in the crypto and forex sectors.
Such scams exploit well-known names to trick consumers into believing that high-profile individuals are endorsing these investment opportunities.
A particularly deceptive scheme was revealed in March 2024, when the FMA cautioned against a clone scam targeting users of the legitimate cryptocurrency exchange BTSWE.
Fraudsters posed as BTSWE representatives, promising to recover funds lost in previous investments.
This type of scam highlights how fraudsters impersonate trusted platforms and individuals, further complicating the task of protecting oneself from scams.
As the crypto industry grows, so too does the threat posed by these scammers.
With their tactics becoming more sophisticated and their reach expanding through popular social media channels, investors need to stay alert and cautious.
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