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Australian Couple Loses $900K to Crypto Scam Despite Regulator’s Efforts

Last Updated March 4, 2021 2:38 PM
Jose Antonio Lanz
Last Updated March 4, 2021 2:38 PM

An Australian couple lost AUD $900,000 after “investing” in an elaborate cryptocurrency scam. Mike Taylor, 70, and his wife Karen told local station 7News  that the losses represented the couple’s lifetime savings:

“That was the whole of our superannuation – that’s now gone.”

They did not explain in detail how the scheme worked; however, Taylor commented that it was a cryptocurrency trading website that promised high returns. He added that they decided to invest because the site “looked legitimate.”

The couple made that decision while enjoying a trip around the country in a camper van. Within months, the money practically disappeared,  reportedly leaving the couple – and many other Australians – in bankruptcy.

Taylor told 7news that he had to go back to work, adding that he sold his 1965 Pontiac “to make ends meet.”

There are other incidents of crypto scams stemming from Australia:

Crypto Scams Have Increased in Recent Years

Unfortunately, this is not an isolated case. Contrary to what many people think, crypto scams have increased considerably since 2017. A report issued by the Australian Competition and Consumer Commission (ACCC) revealed that in 2018, losses generated by crypto scams amounted to AUD $6.1 million (USD $4.3 million). This number represents a 190 percent increase over 2017 .

With this pair’s AUD $900,000 already gone, 2019 seems set to follow this trend; the Australian Securities and Investments Commission (ASIC) is aware of this. A 32 percent increase in fraud over last year has so far been reported, with more than 2,300 documented cases.

The Australian securities watchdog has announced in its corporate action plan for 2018-2019 that the crypto sector and ICOs are a priority. Should Australia’s policies become a success, the country should be able to reduce the accelerated phenomenon of crypto scams.

One strategy that has gained popularity among Australian scammers is to usurp the identity of celebrities to deceive users. The most famous case was that of Hugh Jackman (who played the Wolverine on the “X-Men” movie series). That scam was reportedly guaranteeing returns of more than 10,000 percent.

Source: Shutterstock

Regulations Matter… Even in Crypto

Because of their nature, cryptocurrencies have three characteristics that complicate the protection of users in times of fraud:

  1. The transactions are irreversible, which makes it impossible for any entity to forcibly return funds to a scam victim.
  2. The network is decentralized, which removes control from the bank and any government institution over the ongoing transactions.
  3. There is a certain level of anonymity that makes it difficult to know with confidence and speed who owns a particular wallet.

For this reason, the Reserve Bank of Australia explained that a scenario in which bitcoin is globally accepted —or even nationally adopted— is “difficult to envisage.”