Five tips on how to spot a Crypto scam

To protect South African consumers, the Financial Sector Conduct Authority (FSCA) introduced a licensing regime for Crypto Asset Service Providers (CASPs) in June 2023.

By November 2023, all existing providers had to apply for a license if they offered crypto-related financial services.

By July 2024, the FSCA had approved licences for 138 CASPs and increased transparency and regulatory oversight in the market.

A surge in Crypto scams

FSCA said although regulations have been introduced, crypto scams are still a significant problem and fraudsters are always looking for new ways to target both new and experienced investors.

“To this end, the FSCA does not hesitate to inform the public about unlicensed operators.”

FSCA is “the market conduct regulator of financial institutions that provides financial products and financial services, financial institutions licensed in terms of a financial sector law, including banks, insurers, retirement funds and administrators, and market infrastructures.”

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Red flags to look out for in Crypto scams

It has listed five red flags that one can look out for in a Crypto scam:

1. Fake websites:

Scammers create websites that mimic legitimate platforms to trick users into sharing sensitive information.

2. Too-good-to-be-true returns

Another red flag is high returns with “guarantees” of big profits.

“Real investments come with risks, so be cautious of unrealistic promises.”

3. Demands for additional deposits

FSCA added that scammers may ask for extra money before “allowing” you to withdraw.

“Legitimate platforms do not operate this way.”

4. Claims that no knowledge or experience is needed

“Any service that tells you there is no need for knowledge or guidance in trading is likely a scam.”

5. Celebrity endorsements

Another red flag mentioned by the institution is ads featuring celebrities.

These are often designed to build trust but do not assume legitimacy without verifying their involvement.

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What to do if you think you have been targeted

“If you or someone you know may be a victim of a crypto scam, contact the Financial Advisory and Intermediary Services (FAIS) Ombudsman for assistance with complaints against registered financial services providers:

Website: FAIS Ombudsman Complaints Portal, email: info@faisombud.co.za, and Client Care Centre: (012) 762 5000 or Sharecall 086 066 3274.”

Exercise caution

Consumers are encouraged to be cautious and proactive.

“Use the resources and protections the FSCA provides to help make informed choices about crypto.

For more information or if you suspect you’re dealing with an unauthorised provider, call the FSCA Consumer Help Centre at 0800 20 3722.”

It is important to remember that informed decisions are safer decisions.

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