Australian Crypto Scams- Everything you Need to Know

Cryptocurrencies by their very existence promote decentralization and do not fall under the control of a central authority. Therefore, it is not surprising to see that it was not a crowd pleaser and also explained why a number of governments took regulatory strides for prohibiting any dealings with digital assets. However, it should also be noted that there are countries that have embraced this disruption that’s associated with virtual currencies, even if some are on the other side of this technology. But, in Australia’s case, the situation has turned out to be ironic. Before anything else, the country chose to be crypto-friendly since they legalized cryptocurrency as a property back in 2017.

As long as crypto exchanges were registered under AUSTRAC, which is the financial intelligence agency in Australia, crypto exchanges were allowed to operate easily. Unfortunately, there has been an alarming increase in the number of crypto-crimes in Australia. These scammers are just fueling the resolve of another countries that are anti-cryptocurrency to stand against these digital assets and everything they represent. Even though crypto scams and hacks are not uncommon in the crypto space, they do raise some eyebrows when there is incessant news of these crimes coming from a specific country.

This is exactly what has happened in Australia. The number of crypto crimes have increased in Australia and many people have suffered their consequences. An Australian couple lost more than AU$20,000, which is around US$14,000, due to a Bitcoin scam. According to the report, Nick and Josie Yeomans made an investment in a trading scheme they had come across on Facebook. This scheme was known as, which is quite similar to The couple was able to earn a solid return on their investment, enough that they decided to draw out funds for investing more.

At this point, the purported firm took hold of the funds and even taunted the couple via a WhatsApp message. The Yeomans are not the only victims in Australia. In April 2019, it was revealed by the Competition and Consumer Commission in the country that there was an increase in cryptocurrency scams by 190% as compared to last year. This huge increase in the number of scams led to a loss of $6.1 million Australian dollars for Australian crypto users, which is around US$4.3 million. Most of the victims of these scams were lured in with the promise of commodity trading, forex trading access and other investment opportunities in return for crypto payments.

Of the total AUD 6.1 million, 2.1 million was loss in this manner. After these occurrences, swift checks were made by the Australian Securities and Exchange Commission (ASIC) against any suspicious websites. They also issued a warning to the crypto community in Australia to steer clear of any alleged suspicious organization dealing under two names; GFC Investments and DartalonLtd. Similar warnings had been released previously by the ASIC regarding crypto-asset funds that were aimed at retail investors as well as Initial Coin Offerings (ICOs).

As a matter of fact, the watchdog even put a stop to five different ICOs from raising any capital from April 2018. They stated that the companies didn’t meet the security standards that were required for running such businesses. In response, the ASIC also set up MoneySmart, which is a website that could be used by investors for educating themselves on different financial matters before putting their money in ICOs.

Crypto Scams and their Ripple Effect

Every time crypto crimes happen, affected bodies are always suggested by outsiders to take preventative measures in place of corrective ones. However, with the security provisions and regulations in Australia for cryptocurrency exchanges as well as retail investors, it can be very difficult to apportion responsibility and blame. Nevertheless, after the drastic increase in crypto crimes, the Australian government has been forced to revise their stance where cryptocurrency is concerned. It prompted the Central Bank of the country to eventually declare that Bitcoin (BTC) and other cryptocurrencies would not be used for making mainstream payments.

At the time, Will Day, the ATO deputy commissioner stated that while legitimate investments could be made in cryptocurrencies, they were also being used for facilitating tax crimes. The full impact of the restriction imposed by the Australian government wasn’t evident immediately. However, if a crypto-friendly country like Australia is forced to back off from their stance on cryptocurrencies, it will be difficult to chance the minds of crypto-averse countries about these digital assets because they will only see their worst fears come true. This could certainly be harmful for the growth of the crypto space in the long run.

Common Crypto Scams in Australia

  • Fraudulent ICOs

Fabricating a fake ICO, creating marketing hype and then persuading people to buy a token is the most common way of pulling a scam. ICOs are an innovative and great way of starting a company and this aspect is misused. There are some clear indicators of fraudulent ICOs that you should look for, such as copied whitepaper, ignoring hard questions, anonymous team, no strong reasons for the coin’s economy, no roadmap and unusual speed in execution and mismatch in said and written words.

  • Shady Exchanges

This is perhaps the second most common scam that you will come across. With the popularity of the crypto industry, a lot of exchanges sprang up overnight and began to advertise their services. It is essential for investors to be very careful with such exchanges because once you trust them and deposit funds with them, you will not be able to get it back if the exchange turns out to be a scam. There are also some exchanges that start well, but fail to innovate and scale so they run away with their clients’ money.

  • Pyramid or Ponzi Schemes

There are a number of investors who have fallen for this particular scam. These have not just been used for cryptocurrency and blockchain, but are common in the business world. Ponzi or pyramid schemes usually ask investors to recruit more people and offer commission in exchange. They don’t sell or promote a product; they are more focused on recruiting new investors. Their aim is to get more people to invest money and they use it for paying previous investors the promised profits. Investors are led to believe that the profits were generated through the sales of the products they had invested in. Spotting a Ponzi scheme is very easy as it will offer you a high payout and ask you to recruit investors.

  • Fake Crypto Wallets

Wallets are an essential tool that you will require when you are investing in cryptocurrency. They are used for keeping tokens and coins and just like fake accounts, websites and apps, their purpose is to scam, phish and acquire money from others. Wallets are prone to a lot of crypto scams. Most of these are available in Google Play Store and can be downloaded for free. Most of the downloadable apps show the name of the company, its developer and website. You need to be very meticulous when you are choosing an app. They usually have websites that you can check and it is best to not download one if you are unsure about it.

  • Social Media Giveaway Scams

There are lots of social media groups and users on Twitter, Facebook and Telegram that sometimes impersonate prominent figures in the crypto space, such as Andreas Antonopoulos and VitalikButerin, and offer giveaways. Bear in mind that no one is going to give away any crypto for free as it costs money.

  • Cloned Websites

It is possible to make exact clones of legitimate projects, which usually include ICO websites and exchanges, and they are used to steal personal information and funds. You should always double check the URL and bookmark websites that you visit routinely. These cloned websites use similar letters in the URL to make them appear like the real ones if you give them a quick glance. For instance, they can use 0 instead of 0 or ‘m’ rather than ‘n’.

  • Email Scams

Also referred to as phishing, fake emails can be used for redirecting users to fake websites where they attempt to steal personal information and funds. These often occur during ICO crowdsales. Scammers have obtained databases of personal information and emails from past ICOs in an attempt to fleece new investors of their funds.

  • Fake Support Teams

This also falls under the category of phishing campaign and involves groups pretending to be support teams of a project. They ask you to share deposits, personal information and private keys.

  • Malware and Crypto Mining

There are two forms of malware in the crypto world. The most common one is when malicious software is installed with the naïve consent of the user on a mobile device or computer. The purpose is to steal funds or private keys. The second form of malware is crypto mining malware. In this case, the resources of the infected computer are used for mining cryptocurrency, which effectively creates a decentralized network.

Increased GPU or CPU usage is a telltale sign of increase in crypto mining. This will make your device noisier because the fan speed will increase for keeping your device cool. Hence, you need to be very cautious when you are installingany software on your computer for dealing with or trading crypto. Keep an eye on the extensions that are being installed and the authenticity of the software and its source should also be checked.

These are some of the common Australian crypto scams that have occurred and people need to be aware of them in order to stay safe.

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