As the crypto industry grows globally, bad actors are using the success to enrich their pockets. One of Africa’s biggest economy, South Africa currently sees a rise in crypto-related scams. When Bitcoin rose by 100% within a month, many people suspected that its incredible success would attract investors to secure profits within a short time.
Unfortunately, issues like this make interested investors vulnerable to scammers, who deceive them with empty promises before running away with their money. Last year, different countries recorded a huge rise in crypto-related scams, where unknown individuals use public figures to attract people into investing in the nonexistent crypto. The scammers use well-known personalities within that region to earn trust from their unsuspecting victims.
South African authorities warn against crypto investments
Yesterday, one of the country’s regulators, the Finance Sector Conduct Authority (FSCA), spoke on the nation’s cryptocurrency scams. The authority, which regulates the finance sector, explained that it received numerous complaints from individuals who lost a lot of money through crypto investments scams.
Some even lost their entire savings to those despicable individuals, who promised their victims unrealistic returns on the digital asset investment. Interestingly, around the scamming period, the country also had a Ponzi Scheme orchestrated by Mirror Trading, which deceived thousands of investors within and outside South Africa.
The Ponzi attracted numerous individuals with a promise of 10% each month on the money deposited. The scammers made over $600 million from the scheme. Incidences like crypto-related scams and the Mirror trading necessitated the warning the regulators issued investors concerning investments that promised high returns within a short time.
Unfortunately, the scams made the country rethink the regulations in place for digital asset investments. Amongst counterparts in Africa, South Africa is very open to cryptos as a fast-growing payment means. The rise in crypto-related scams could change its earlier approach on cryptos.
South Africa plans to regulate cryptocurrencies
The African country is already taking steps towards its digital asset regulations for Bitcoin and Ethereum. Similarly, there had been an internal agitation for stringent rules for cryptocurrencies in 2020. Last year, many countries saw the need to put some digital assets restrictions to prevent its use for malign and illicit purposes.
Several governments claimed that the digital asset helps criminals fund their illegal activities. Janet Yellen, the US Treasury Secretary, concluded that terrorists use the asset for terrorism funding, which authorities could not trace. Fortunately, nations are making new rules to keep the countries safe.
FSCA explained that it doesn’t regulate the investments, meaning investors could not recover money lost in the scam. Presently, the African country sees a great demand for crypto-related services, which led to the scams’ success. The regulator explained further that crypto investments are generally risky, making individuals lose all their money.
Many crypto-providers overstate returns to attract more individuals without explaining the risks involved in the volatile asset. The country’s taxation department is currently trying to get details on crypto holders, linked to new taxes that Government would levy on the holdings.