Cryptocurrency scams pose a major risk to your financial security. Scammers will use a variety of strategies to get you to invest in phony or unsafe cryptocurrency schemes by offering high returns and low risks. As crypto knowledge and regulation are still comparatively lacking in Eswatini, our citizens are frequently targeted by Cryptocurrency scammers. This article has been written to better inform and arm Emaswati on cryptocurrencies and how they work, as well as how to recognize or avoid falling prey to crypto fraud.
Cryptocurrencies and crypto assets/investments relate to digital currencies issued by private entities or individuals that use cryptography or sophisticated digital files as value representations. They do not exist physically and have no legal tender status in Eswatini.
Bitcoin and other cryptocurrencies remain volatile and those who participate find themselves vulnerable to these investment scams. The value of cryptocurrencies and investments is generally unrelated to any traditional store of value, such as fiat currency, resulting in significant price speculation.
As a result of this volatility, consumers should be aware that investing or trading in cryptocurrencies or crypto assets is risky, and those who choose to invest in this type of products should carefully consider the fact that, while they have the potential to make huge gains, they also have the potential to lose a lot of money.
The Central Bank of eSwatini (CBE—later referred to as the Bank) and the Financial Services Regulatory Authority (FSRA) are aware of some websites, mobile apps, firms, and individuals promising high returns in crypto investments or related products.
As with any investment, consumers are advised to ensure that they understand what they are investing in, and the risks involved. Consumers should always conduct due diligence that includes the review of fees and expenses associated with a product to ensure that the products are suitable for their financial situation, which includes their investment objectives, risk tolerance, and time horizon. The due diligence exercise must also include confirming the legitimacy of the person selling the products and verifying that they are licensed to provide financial advisory services.
Crypto scams are a type of investment fraud that can take many different forms, such as phishing scams, Ponzi Schemes and rug pulls. Because cryptocurrencies and related investments are currently not regulated in Eswatini, dishonest actors can easily prey on inexperienced investors. The Bank and FSRA warn the public about the following concerns and risks associated with cryptocurrency investments:
According to blockchain data platform Chainalysis, over USD 1.6 billion (E27 billion) in cryptocurrency has been stolen from users as of 2022. This means that you could lose your money in a single hack and have no way of recovering it because Eswatini is a largely unregulated space in crypto.
INVESTMENT SCAM WARNING SIGNS
If it seems too good to be true, it is most likely to be a scam. Always remember that investments come with a set of risks, and there are no guaranteed returns.
Be wary of individuals and companies that contact you out of the blue to offer you investment opportunities. This could be through social media, cold calls, text messages, emails, or even brochures.
Investment scams may also focus on recruiting through a known contact, such as a friend or colleague, who may claim to have invested in the crypto assets and made good returns. These include word of mouth marketing relying on affinity networks such as your church, children’s school, etcetera. Sometimes a prominent and influential person is used as a promoter or ambassador of the scam.
Most investment scams pressure you to make a rushed decision by offering you a limited time offer, discount, or bonus if you sign up before a deadline.
When calling and pitching crypto investment offers, scam artists may try to convince you to give them remote access to your computer to guide you to a fake crypto asset trading platform to invest. The scam artist may even try to help you with depositing money into the fake trading platform while stealing personal information, including bank account numbers.
Scam artists may ask you to use an electronic transfer (wire money) or transfer crypto assets to their desired platform to assist you in a crypto investment opportunity. These transfers are instant, and hard to recover. It is nearly impossible to trace the recipient.
Be sceptical if you must wait or if it is hard to cash out your investment funds. Even if your account balance shows up next to your name on the investment website or you get a screenshot showing that they sent money to your account, this is not a guarantee that you will get your money. Some scammers convince their victims to reinvest their payments with the promise of higher returns or pay more money when withdrawals are made in future.
Some scammers try to get money from people who invest in cryptocurrency by making fake apps that can be downloaded from the Google Play Store and the Apple App Store. Investors should pay attention to misspellings in the name of the app, strange colouring, or distorted logos.
WHAT IS IMPORTANT TO NOTE:
The Bank and the FSRA remind the public that:
WHAT TO DO?
HOW TO REPORT CRYPTO SCAMS
Because many of the crypto scammers are located outside of Eswatini, our law enforcement institutions can only do so much if the scammer is not in Eswatini. However, you must still report these fraudulent schemes.
You can report crypto scams to the following institutions:
THE BOTTOM LINE
Crypto assets are high-risk investments that are not suitable for all investors. The nature, longevity, and future application of crypto assets are largely unknown and rapidly evolving. Consequently, it may not be appropriate for your financial plans and goals.
The CBE and the FSRA advise consumers to exercise caution and to be aware of the potential risks when investing in, trading, or dealing in any crypto-related financial products.
The Bank and the FSRA continue to monitor developing trends in cryptocurrency and crypto investments as part of its commitment to creating an enabling environment for innovative financial products.