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Watchdog warns of celebrity-endorsed bitcoin scams

ASIC has uncovered several cryptocurrency scams using Australian celebrities, prominent news sites, and government agencies to reel in investors.

Endorsements from celebrities and business figures such as Waleed Aly, Mike Baird, Celeste Barber, Andrew 'Twiggy' Forrest, David 'Kochie' Koch, Michael Rowland, Dick Smith, Karl Stefanovic and Virginia Trioli have been identified by ASIC as fake.

The fraudulent use of these figures in the marketing of financial products is a key indicator of a scam, the corporate watchdog said, pointing to fake websites posing as crypto trading robots and cryptocurrency "pump-and-dump" scams as two key major concerns.

A trading bot is a software program that automatically trades cryptocurrencies on the user's behalf, such as Bitcoin, Litecoin and StableCoin.

"Some trading bots request permission to access your savings account to carry out the trade," ASIC explained.

"Cryptocurrency trading bots may not be illegal or fraudulent in and of themselves."

Fake trading bot websites include Bitcoin Evolution, Bitcoin Revolution and Bitcoin Trader, ASIC said.

"These websites are advertised using fake celebrity endorsements, which appear on social media sites such as Facebook, Instagram, LinkedIn and Twitter," the watchdog said.

"When an investor clicks on the article or ad, they are often sent to a 'mirror site' - a fake version of a legitimate news site such as ABC News."

The fake trading website will also typically reference margin FX trading or contracts for difference (CFDs), ASIC said.

The investor will then be asked to deposit funds into an account, via a crypto wallet or their bank account.

"In some instances, when the investor logs into their account, it may look as though they are making profits initially (due to fake data), but eventually they will see 'trading losses', even though no actual trading is taking place," ASIC said.

"When investors eventually ask to withdraw their funds, scammers either cease all contact or demand further payment before funds can be released."

With many scammers based overseas, ASIC warned that it was "almost impossible" to track and recover lost money, with funds transferred into Australian or foreign accounts often cleared and moved to offshore accounts within minutes.

The watchdog also said it was aware of several 'pump-and-dump' schemes; where scammers will combine online search terms, like a celebrity and Bitcoin, to generate fake news articles and ads on social media.

These ads are often republished by new sites and search engines, ASIC said, perpetuating interest in the cryptocurrency to push prices higher.

"As more people buy into the cryptocurrency, its value rises ('pumps' up) and other traders latch on, further boosting its price," it said.

"The scammers then sell ('dump') their own share in the now-overvalued cryptocurrency. This causes its value to plummet, along with any hope for victims of recovering their initial investment."

Those who believe they have fallen victim to a scam should contact their bank as soon as possible, ASIC said, and also report the matter to police.

Read more: ASICScamCryptocurrencyBitcoinFraud
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