The UK’s fraud reporting agency, Action Fraud, says cryptocurrency fraud has surpassed £300 million in 2022, an increase of more than 40%.
Law firms said the data, provided by Action Fraud, reflected the scale of cyber crime and the high-profile collapse of crypto exchange FTX last year that triggered a wave of losses among retail investors.
Cryptocurrency scams are part of a wider “epidemic” of fraud, which accounted for more than 40% of all reported crimes in England and Wales last year, according to the Office for National Statistics.
Losses from crypto fraud increased 41% year on year to £306 million in the 12 months to March 2023 compared with £216.5 million in the previous year, said law firm RPC, 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 that the collapse of FTX had on UK retail investors,” said Dan Wyatt, partner at RPC.
More than a third of crypto fraud losses for the year, £115.7 million, occurred in November 2022, the month FTX filed for bankruptcy.
Jennifer Craven, fraud expert at law firm Pinsent Masons, said the figures reflected how widespread crypto crime had become. “[The figures] align with the sharp increase in English High Court actions commenced by victims of crypto fraud who are determined to recover their losses by civil remedial means,” she added.
In February, the Treasury set out draft proposals for the regulation of crypto assets, including new requirements on exchanges to ringfence customers’ money in the event of insolvency.
MPs on the House of Commons’ Treasury select committee said last week that cryptocurrencies should be regulated in a similar way to the gambling sector, given it had “no intrinsic value, huge price volatility and no discernible social good”.
RPC said the losses could also reflect the collapse of crypto-related Ponzi schemes that were unable to continue as the value of the cryptocurrencies they were based on cratered.