"I wanted an easy answer, a magic way of making money that I didn’t have to work for or wait ten years for compound interest to deliver. I wanted a fast buck.”

Stuart (not his real name) described the feelings that led him to nearly losing thousands of pounds to scammers.

“It all sounded so plausible. I don’t understand cryptocurrency, but these guys sounded as if they did, so best to let them do their thing. Everyone knows someone who’s made a fortune out of BITCOIN, so why be left out? You just need the right platform and a bit of know-how and you’re away. Of course, it’s risky but that’s okay, I wasn’t planning on betting the house or anything daft like that, just a few thousand…”

It started innocently enough when he saw an online advertisement featuring Martin Lewis endorsing cryptocurrency profits as a way of fighting the cost-of-living crisis. His energy and food bills have gone up exponentially and income has not. An email led to a phone call and a conversation with Ryan, an account manager, who offered to set up his account with £250. He registered his name on a Crypto-Guider website and deposited £250 into a ‘wallet’ with Kraken using his debit card.

Once the money was safely deposited Ryan launched into a presentation setting out  the £2500, £5000 and  £10,000 investment options. Stuart immediately smelt a rat saying that he had understood he could start the investment with £250 and ended the telephone conversation. He wasn’t sure if it was a scam, but he certainly wasn’t going to part with thousands of pounds on the strength of a telephone call.

“I felt as if I’d made a mistake and had lost £250. I felt stupid but decided to put it out my mind.”

Red Flag: The advertisements featuring Martin Lewis, Holly Willoughby and Philip Schofield (TV’s This Morning) and Gordon Ramsey (with a picture of a Ferrari purchased with crypto profits) are fraudulent. The celebrities have tried to get them stopped and failed so far. Ignore them. Completely.
“Numerous phone calls followed from a Canadian number all of which I ignored. Ryan or Dean or Sarah would follow up with an email inviting me to suggest a convenient time for a call to discuss my account. I deleted the emails. This went on for several weeks and I ignored all of it. Each phone call and email convinced me further that it was a scam.”

Then they played a masterstroke. They sent Stuart an email with a graph showing his £250 had become £750, inviting him to discuss future strategy.

“This completely undermined my resolve. Despite my ignoring their communications they had made money for me. I felt bad about ignoring them. They had gone ahead and made profits for me.”

He looked away as he murmured, “You’re probably shocked by my naiveté. I confess it was tinged with greed.  I wanted to believe it was possible to make money out of cryptocurrencies, in nice easy lumps without effort or worry. Oh bliss…”
Red Flag: There was no reliable evidence that the ‘investment’ had trebled in value, just a graph with a nice upward curve. Stuart made no further effort to verify the performance of the ‘investment.’ He  saw what he wanted to see – money for nothing, freedom from worry, new shoes…

He decided to speak to the cryptocurrency geniuses. His new ‘account manager’ was Reece who was charming, telling him about his daughter and the baby on the way.

“He was good, very good. I felt reassured but my defensive antennae were not completely disabled. I asked where their office was situated.”

“In Canary Wharf where most financial traders are.” Plausible, just.

“I asked if he made the trades himself or was there a team doing it. He answered with a convoluted explanation using words like ‘negative balance’ ‘timing’ and ‘new issues’ and at the end of each sentence said, “Make sense?” without pausing for an answer. I knew this was a classic salesman’s technique, hurrying you along a path with excited enthusiasm. The only thing that made sense to me was the £750 on the screen. Investments are like sausages; we don’t really want to know how they’re made.”

Stuart was passed to a senior trader who said he was taking time away from some big clients to talk to him. He explained that the brokerage made its money on the difference between the buying and selling price. It sounded plausible, but he didn’t say what was being bought. This is salesman’s patter, but it sounded good enough to Stuart.

By now I was getting a bit bored with all this technical stuff. I just wanted to get on and make some money.”

(Think ‘Show me the Money’ in Jerry Maguire.)
Red Flag: Stuart was flying on pure emotion having abandoned any attempt at critical thinking. Reece and his accomplice Harvey had given him just enough information to sell himself on the idea of making money easily.

If you ever feel like this in a conversation about investments with an anyone, Stop! Take time out, an hour at least, go for a walk, breathe.  There is no investment opportunity that won’t wait while you allow yourself time to make a rational decision.

Stuart didn’t do this. He reached in his pocket for his debit card.

 “I was handed over to Sarah who was going to ‘help’ me with the transaction. I went through two layers of security and quickly transferred £2500 into my new Kraken account.  I pressed the keys quickly and Sarah asked me to go back at one point so that she could ‘…take a screenshot’.  I realised later that she was copying my debit card number so that she and her pals could clean out my bank account later.”

By now it was late on a Friday afternoon and the ‘traders’ said they would be in touch in an hour or so when the money had cleared to discuss an investment strategy. The bitcoin market trades 24 hours a day, 365 days a year as it operates on a decentralised computer system. Another clever move by the scammers as they were basing the need for speed on a fact. The other fact is that the cryptocurrency market is unregulated, so it’s like the wild west, but without the guns.

This story has a happy ending because Stuart’s bank, the Nationwide, recognised the transaction as potentially fraudulent and put a stop on it. A Nationwide email asked him to call their fraud team the next day.

“My gullibility became painfully obvious during the telephone conversation. My pride was dented but my bank account (other than the original £250) remained intact. Thankfully the Nationwide didn’t allow the money to be transferred.  Within five days Nationwide had issued a new debit card and I was good to go.”

This was a lucky escape entirely due to the vigilance of the fraud team at Nationwide. Others are not so lucky. Since 2021 according to the US Federal Trade Commission 46,000 people have reported losing over $1bn in crypto scams. Those are the reported figures – many people are too ashamed of their stupidity to report that they have been scammed.
How Can You Protect yourself from investment scams?
  • Never respond to an email or text message purporting to offer investments whether crypto or other currencies. They are almost certainly fraudulent.
  • Ignore all investment advertisements endorsed by a celebrity. They are fraudulent.
  • If something sounds too good to be true, it probably is. (Repeat after me…)
  • Only take investment advice from a regulated financial adviser. Check their credentials on the FCA register here.
  • Never give out personal or financial information over the telephone or by email unless you 'know' who are communicating with.
  • If an explanation about an investment sounds complicated, be wary and take time to understand it properly before proceeding.
  • If all else fails, listen to your gut. Your mind will tell you anything you want to hear, but your gut never lies.

Kraken is a legitimate website enabling investors to convert their cryptocurrency into sterling. Crypto-Guider is a false website, a scam.