Lloyds Bank has issued an urgent warning over the rising threat of crypto scams, as a growing number of British investors risk being defrauded by a wave of fake adverts posted on social media.

The number of cryptocurrency investment scams reported by victims so far this year has risen by 23%, compared to the same period in 2022.

On average, the amount lost by each victim of a crypto scam was £10,741, which is up from £7,010 in 2022. Lloyds said this is more than any other type of consumer fraud, such as romance scams or purchase scams.

Furthermore, the bank said that two thirds (66%) of all investment scams start on social media, with Instagram and Facebook being the most common sources, including a mixture of bogus ads, fake celebrity endorsements and targeting victims through direct messages.

The most common age range for crypto scam victims is 25-34 years old, who make up a quarter of all cases.

Lloyds Bank warned that there are two main ways that fraudsters snare the cash of would-be investors through crypto scams.

These include the illusion, where there is no genuine investment platform or cryptocurrency involved and the scammer is posing as an investment manager, or through a takeover, where an actual investment account held in the victim’s own name and registered with a legitimate platform such as Coinbase or Binance.

Once the funds have been deposited, victims may be tricked into handing over their account login details, or passing control of a digital wallet over to the fraudster.

Fraud prevention director at Lloyds Bank, Liz Ziegler, said: "Investing can be a great way to make money, but you need to make sure your money is going to a trusted, genuine company. Cryptois a highly risky asset class and remains largely unregulated, which makes it an attractive area for fraudsters to exploit. If something goes wrong, you’re unlikely to get your money back.

"Predictably, social media platforms are the main breeding ground for this type of scam, with a mix of bogus ads, fake endorsements and cloned accounts being key to fraudsters’ methods. It’s time these tech firms took responsibility for protecting their customers, stopping scams at source and contributing to refunds when their platforms are used to defraud innocent victims."

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