Investment Scams Targeting Bitcoin on the Rise in Australia

Investment Scams

By: Gerelyn Terzo of Sharemoney 

Australians are losing more money to investment scams vs. a year ago, and most of the time bitcoin, the first and biggest cryptocurrency, has been targeted. According to a report by the Australian Competition and Consumer Commission (ACCC) citing Scamwatch data, criminals stole AUD 25.7 million through cryptocurrency investment scams, mainly involving bitcoin, in the first half of this year, comprising more than half of Australia’s fraudulent investment schemes in the period. The amount for the first six months of the year outpaces the total lost in crypto-related investment scams for all of 2020 by 44%.

“Investment scams are more prevalent than ever, and scammers are capitalizing on interest in cryptocurrency in particular,” said ACCC Deputy Chair Delia Rickard in a statement.

While bitcoin is often involved, it is not the only type of investment scam that Australians need to avoid. Bad actors are also turning to bonds, dating sites, and Ponzi Schemes, for example. In fact, Aussies lost more than AUD 70 million in total investment scams in the first six months of the year, up roughly 120% vs. the same period last year and surpassing the tally for full-year 2020. Worse, results are expected to double by year-end. Criminals have been working overtime as more retail investors have flocked to the financial markets since the virus outbreak.


Source: Twitter 

The number of reported investment scams is up more than 53% vs. year-ago levels to 4,763 incidents. It’s not just money that investors need to protect but also their identity, which the nefarious actors have also been targeting.

Crypto Scams

Cryptocurrencies are still a nascent asset class for which the rules are just beginning to be written. Meanwhile, the bitcoin price has been one of the best-performing assets of 2021 so far, having advanced roughly 60% year-to-date. The bitcoin price set a fresh all-time high of approximately $64,000 back in April, though it has since retreated from that level.


Scammers have been preying on novice investors and seeking to catch sophisticated traders off guard. According to the ACCC, a common approach is for the criminals to lie about having “highly profitable trading systems” that they built either from experience or through fancy algorithms. It is not uncommon for these scams to falsely associate themselves with celebrity endorsements to make the opportunity seem valid.

In some cases, investors might even see some profits to begin with, which are actually recycled funds from other investors entering the scam. Eventually, the scammers pretend technical difficulties are preventing the withdrawal of funds and end communication with the victims.

Rickard warned, “Be wary of investment opportunities with low risk and high returns. If something sounds too good to be true, it probably is.”

Corporate Bond Scams

Bonds are designed to be a relatively safe investment, providing a steady stream of income for investors in addition to returning the principal amount at the end of the term. Investors might not be on high alert when investing in bonds given the relatively low-risk nature of the asset class, with some exceptions. Nonetheless, fixed income securities have found their way onto the radar of bad actors in yet another type of scam making the rounds.

Scammers have been disguising themselves as genuine companies offering Aussie investors a chance to buy corporate bonds — only the bonds are illegitimate in nature. Australians lost nearly AUD 7 million in bond-related scams in the first half of 2021 across nearly five-dozen incidents.

In this case, the bad actors are targeting baby boomers, who tend to flock to safer investments that are not as volatile and stocks and can be depended on for income. Older Australians were victims of more than 40% of such cases and represent nearly 50% of the total amount lost in this category. Millennials are not left unscathed, however, and are the primary target of dating-related investment scams in the following section.

One way that the scammers are spoofing investors is by using valid prospectus filings of the corporations through which they intend to sell their fake bonds. From there, they are altering important data including contact and financial information.

The ACCC recommends that Australian investors do their homework by obtaining the contact details of the company behind the bonds by visiting their website, for example, and confirming the details of the bond yourself. It is also a good idea to work with a registered financial advisor prior to jumping into any investments no matter how innocuous they seem.

Online Dating Investment Scams

Scammers know no limits and are also targeting innocent victims on dating apps and websites. After establishing trust with someone, they proceed to tout their investment scam, which is frequently associated with cryptocurrencies or bonds. From there, they get victims to invest.

Young Australians are generally the target, given their propensity to use social media. These trusting individuals have also been known to frequent shady cryptocurrency projects and enter their contact information online. The ACCC advises investors to refrain from getting their investment advice online or sending funds in any form, including gift cards, to an online connection.

Ponzi Schemes

Ponzi schemes are another threat. Criminals stole more than AUD 1 million from Aussie investors through the fraudulent apps Hope Business and Wonderful World across hundreds of incidents in the first half of 2021. The bad actors captured the attention of their victims through social media ads and made their apps accessible on popular platforms including the App Store and Google Play, both of which have since removed the apps in question.

Once again, the fraudsters gave investors the impression that they could have access to their funds on demand by allowing small withdrawals at first before disappearing altogether with the money. The fraudsters especially targeted refugees from Burma and Sri Lanka.

Australia’s Investment Landscape

Investing has been on the rise in Australia, with 400,000 new traders joining the market since about the time COVID-19 reared its head. The number of active online investors in the country has surpassed 1.2 million, a cohort that increasingly made multiple trades during the pandemic year rather than just buying and holding.

Investing has never been so easy, with the emergence of online trading apps like Robinhood, which is popular in the United States for its commission-free trades. Millennials and Gen Z investors especially are flocking to Australia’s stock market. Close to one-fifth of Australia’s new investors are under the age of 25, while nearly 50% are between the ages of 25-39. With more Australians jumping into the investment waters, it’s more important than ever to make sure they don’t fall prey to these scams.

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