Stick to who you know when investing in crypto

As the popularity of crypto investments have soared, so have the number of cheats trying to make a quick buck out of people investing in them.

Scams associated with crypto have tripled in the last financial year, which has prompted the City watchdog to issue a warning.

In 2018/19, bogus online trading platforms cost investors more than £27m, with the number of reported incidents reaching in excess of 1,800. On average, victims lost a whopping £14,600.

According to the Financial Conduct Authority (FCA), social media is the hunting ground for the fraudsters, promoting their get rich quick message and driving people to their online trading platforms.

The FCA, as part of its ScamSmart campaign, will be bringing this to the attention of the wider public via online advertising to encourage caution when faced with the promise of riches.

The old adage ‘if something seems too good to be true, it often is’ definitely applies here, and remembering it will pay off in the end for those that do thorough checks prior to parting with their hard-earned cash.

Cryptoassets are unregulated. Your capital is at risk.

The first thing to check is whether the platform that is tempting you is approved to do so by the relevant authorities. Platforms that provide regulated financial services have to be authorised by a regulatory body, and they are listed on its register, in plain sight, for everyone to see.

To be authorised, eToro, along with every other regulated financial entity, has to comply with high standards set by the regulator, to ensure we are doing what we say we will.

Small wins on an initial investment are what fraudsters use to draw people in. According to the FCA, they often make contact following an initial profit to push for further investment or convince them to introduce family and friends with the promise of greater profit.

Cryptoassets are relatively new and the sector is fast moving – it is easy to get swept away and as technology evolves, so too does the investment opportunity – whether real or bogus.

Like any investment, research is key. Know what you are putting your money in and who with. Keep an eye on what the market is doing, and only put in what you can afford to lose.

Cryptoassets are unregulated. Your capital is at risk.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.