Extent of Crypto Scams and Losses Among UK Retail Investors

Rising Crypto Scam Incidents and Fraud Tactics

Cryptocurrency investment fraud has surged in recent years, with UK retail investors increasingly targeted. Action Fraud (the national fraud reporting center) recorded 7,118 reports of crypto fraud in the first nine months of 2021 alone. Losses in 2021 reached £146.2 million – about 30% higher than the total crypto fraud losses in 2020. This trend accelerated through 2022 and 2023. By March 2023, the reported value of crypto fraud in the prior 12 months hit a record £306 million – a 41% increase from ~£216.5 million the year before [rpclegal.com]. In fact, November 2022 (amid the FTX exchange collapse) saw an extraordinary £115.6 million reported lost in a single month [rpclegal.com], illustrating how market events can trigger scam activity spikes.

Scam tactics have evolved as well. The City of London Police (which leads national fraud policing) noted that by early 2024 up to 40% of all investment fraud reports were linked to cryptocurrency [itbrief.co.uk]. Scammers employ diverse schemes – fake investment platforms, phishing sites, “rug pull” crypto projects, celebrity impersonation ads, and even romance scams – all exploiting the hype around digital assets [itbrief.co.ukitbrief.co.uk]. For example, bogus celebrity endorsements are a common lure: fraudsters create professional-looking ads or websites featuring well-known figures to legitimize their schemes. Between April 2020 and March 2021, 558 investment fraud reports referenced a celebrity endorsement, 79% of which involved crypto. More recently, scammers have even used AI-generated images/videos of public figures to promote fraudulent crypto opportunities.

Victim Demographics and At-Risk Groups

Crypto scam victims span various age groups, but certain demographics are more exposed. In 2021, young adults (18–25) made the highest number of reports (11% of victims) and over half (52%) of victims were under 45, reflecting younger investors’ tech-savvy but sometimes vulnerable engagement with crypto. By contrast, recent data suggests middle-aged and older adults often suffer the largest financial harms. Action Fraud figures for 2024 show people aged 35–44 were most likely to be targeted, while those 55–64 incurred the greatest losses on average.

A notable tactic is impersonating trusted financial personalities to win over older investors. In 2024, 537 fraud reports involved criminals posing as famous figures; the most impersonated was consumer champion Martin Lewis (44% of those cases). Victims of the Martin Lewis impersonation scams ranged from age 31 to 93, but strikingly 68% were over 60 – likely because this demographic recognizes him from TV and may be more trusting. Elon Musk (40%) and Jeremy Clarkson (8%) were the next most-used identities in these scams. Such data underscores that older investors, even if fewer in number, face significant risk – especially when scammers exploit their familiarity with certain public figures.

Another vulnerable group includes those seeking quick profits or financial remedies. During the 2022 “crypto crash”, many Britons who bought in during the hype saw steep losses, which scammers exploited by promising recovery of losses or “surefire” new investments. And notably, fraudsters often re-target past victims with follow-up scams (e.g., claiming they can help recover lost money) – further endangering those already scammed.

Financial Losses from Crypto Scams

The financial toll of crypto scams on UK consumers has been substantial and growing. Annual reported losses climbed from £190.5 million in 2021 to approximately £240+ million in 2022 (projections based on £160.6m in losses by August 2022), and then to ~£306 million in 2023 [itbrief.co.ukrpclegal.com]. For context, crypto scams now constitute the majority of investment fraud by value – by early 2025, 66% of all investment fraud reports to Action Fraud involved crypto. In 2024, Action Fraud received 25,843 investment fraud reports (across all types) with £649 million total lost; if two-thirds were crypto-related, that implies on the order of £400+ million lost to crypto scams in one year. In other words, crypto fraud has become a £300–£400 million/year problem in the UK by mid-decade.

Average losses per victim have also risen, indicating scammers are extracting larger sums. The law firm RPC found the average loss per crypto fraud report jumped 64%, from about £21.7k in 2021/22 to £33.7k in 2022/23 [rpclegal.com]. Action Fraud similarly noted an average loss of ~£20,500 per crypto fraud victim back in 2021, and this average has likely grown as scammers hone in on higher-net-worth targets or persuade victims to invest more. Some scams (like fake trading platforms or “pig butchering” romance-investment hybrids) involve long con approaches where victims are groomed over weeks to deposit ever-larger amounts, leading to six-figure personal losses in certain cases (as alluded by UK authorities and evidenced in FCA’s ban on crypto derivatives after young traders racked up six-figure losses).

It’s important to note that these figures likely understate the true scale. Fraud is notoriously underreported – the UK saw 4.5 million overall fraud incidents in 2022 (all categories), but many crypto scam victims never come forward out of shame or lack of awareness. The National Crime Agency estimates as few as ~13% of fraud cases get reported. Thus, actual crypto losses could be significantly higher than the hundreds of millions captured in official reports.

Losses from Speculation and Leverage

Beyond outright fraud, many UK consumers have incurred heavy financial losses through legitimate but risky crypto investments, especially when using borrowed money or leverage. The unregulated nature and extreme volatility of crypto means sharp market downturns can wipe out unprepared investors. FCA research shows that after the 2021 boom, the 2022 crash left almost half (45%) of UK crypto owners with losses in the year up to April 2022, a huge jump from only 10% who reported losses the year prior. In that one-year span, 1 in 10 crypto owners lost over half their portfolio’s value (losses >50%) and an additional 21% lost between 21–50%. Bitcoin’s price had fallen by two-thirds from its 2021 peak by August 2022, and Ethereum was down ~59% in 2022, illustrating how speculation can turn into significant losses even without fraud.

Alarmingly, a growing number of retail investors have been buying crypto on credit, effectively leveraging themselves. The Financial Conduct Authority (FCA) found that by 2024 14% of UK crypto buyers were funding purchases via credit cards, loans, or overdrafts, up from just 6% in 2022. Industry data similarly indicated 14% of crypto purchases in 2024 were debt-financed. This means hundreds of thousands of Britons may be incurring debt for highly speculative assets, putting them at risk of not only investment losses but also insurmountable debts if crypto prices drop. Regulators have reported cases of “young traders racking up six-figure losses” on crypto derivatives and margin trades – a precedent that influenced bans on certain high-risk products. Even without fraud, these speculative losses represent a significant financial harm: smaller investors with under £10k in crypto are more likely to be in a loss position, and 46% of all UK crypto holders said their crypto was worth less than they invested (only one-third had gains).

Regulator Data and Warnings

UK regulators and law enforcement agencies have been actively monitoring these trends. The FCA’s consumer research (2022–2024) highlights both the rising popularity of crypto and the misconception of safety nets. As of August 2024, 93% of UK adults had heard of crypto and 12% (approx. 7 million people) owned some. This is up sharply from about 4% ownership in 2021. The FCA continually warns that crypto investing remains unregulated and high-risk – consumers should be prepared to “lose all your money” and cannot access UK financial compensation schemes for crypto losses.

Action Fraud and the City of London Police (which hosts the Action Fraud reporting center) have issued repeated alerts about crypto scams. Key findings from 2024 Action Fraud data include:

• Crypto was the most common asset in investment scams (66% of reports), reflecting how fraudsters entice victims with Bitcoin, “crypto mining” or tokens more than any other commodity.
• Social media is a major enabler – 36% of investment frauds in 2024 originated through social platforms, with WhatsApp (40% of those) the top channel, followed by Facebook (18%) and Instagram (14%). Unsolicited approaches via messaging apps are a huge red flag.
• The “celebrity endorsement” scam factor – Over £10 million was lost in 2024 by victims who were convinced to invest by a scammer impersonating a famous person. Martin Lewis’ name alone was used in hundreds of cases targeting mainly older victims.
• Crypto and “trading” scams dwarf other investment scam types. In 2024, cryptocurrency and generic trading schemes together made up 75% of all investment fraud reports, vastly outnumbering traditional investment scams involving things like gold, property, or forex. This shows where criminals are focusing their efforts.

The police and FCA both stress basic precautions: if an offer looks too good to be true, it likely is. Consumers are urged to check the FCA register for firm authorisation, be wary of any guaranteed returns or pressure to act fast, and never send money to someone they only met online or via social media. The FCA’s ScamSmart campaign and Action Fraud’s resources emphasise these points.

Outlook for 2025: Consumers at Risk and Regulatory Moves

With crypto ownership at an all-time high in the UK (millions of retail holders), the pool of potential victims remains large. The FCA is in the process of consulting on stronger crypto regulations in 2025, but until rules are finalised and implemented, gaps in protection persist. Notably, the FCA’s Discussion Paper DP25/1 (May 2025) proposes a ban on retail investors using credit to buy crypto, aiming to curb the debt-fueled speculation and prevent households from ending up with crippling losses if crypto markets plunge. This proposal was driven by the “worrying trend” of Brits going into debt for crypto – regulators fear volatile swings could leave many “stranded with insurmountable debts”. While the ban (and other measures like new marketing rules and exchange oversight) are on the horizon, they are not in force yet.

In the meantime, millions of consumers remain at risk through 2025. Given the ~7 million UK adults holding cryptoassets, and that 1 in 7 of those may be using borrowed money to do so, the exposure is significant. If crypto prices experience another downturn or if new sophisticated scams (e.g. those leveraging AI for deception) proliferate, the number of affected consumers could climb further. Industry observers note a potential silver lining that awareness is improving – after high-profile collapses and scams, some investors are becoming more cautious [rpclegal.com]. Indeed, reports in early 2023 suggested the number of crypto fraud reports was leveling off after the post-FTX spike [rpclegal.com]. However, any lull may also be due to the “crypto winter” (reduced overall investment activity), meaning a market rebound could again bring a surge in new, inexperienced entrants – and fresh targets for scammers [rpclegal.com].

As the FCA works to roll out compulsory crypto regulation (bringing exchanges and crypto promotions into the regulatory perimeter), the immediate challenge is consumer education and vigilance. Both regulators and police estimate many more could be affected if proactive steps aren’t taken. The government itself acknowledged about 12% of Britons have owned crypto (up from 4% in 2021), and warned of “little or no underlying value” in many tokens – implying that a lot of recent investors could face losses absent greater protections.

In summary, UK retail investors have suffered extensively from crypto-related scams and losses: tens of thousands of victims, hundreds of millions in fraud losses, and even more in market-driven losses – with young investors often duped by get-rich-quick schemes and older ones preyed upon via trusted-figure impersonations. Regulators’ data and media reports paint a stark picture of a fast-growing problem [itbrief.co.ukrpclegal.com]. Going into 2025, the FCA and others are racing to tighten rules and reduce harm, but with crypto adoption still rising and fraudsters adapting, a significant number of consumers remain at risk until stronger safeguards and awareness efforts take hold.

Sources and References

• Action Fraud – Cryptocurrency fraud leads to millions in losses
• City of London Police – Investment Fraud 2024 Statistics
• Financial Conduct Authority (FCA) – Cryptoasset Consumer Research 2022–2024
• RPC Law (press release) – Record UK Crypto Fraud Reports (£306m) [rpclegal.com]
• TRM Labs – Crypto Fraud in the UK (FOI data 2019–2022)
• BanklessTimes – FCA to Ban Borrowing for Crypto (credit stats)
• Reuters – UK to Regulate Crypto, 12% of adults have owned crypto
• Action Fraud / City of London Police – 2024 fraud alert on social media & impersonation

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