A LAW firm has warned potential cryptocurrency investors after two of its clients won £130,000 in court after falling victim to a scam.
Ellis Jones Solicitors, which has offices in Bournemouth, Poole, Ringwood, Swanage and Wimborne, acted for the pair but warned others to be wary of crypto scams.
The pair transferred digital tokens, known as Ethereum, to a UK-based individual to trade on their behalf, expecting to receive profits from his investments.
But, after initial trading and updates, he failed to return any funds.
Solicitor Daniel Lewis is a member of the firm’s recently launched cryptocurrency team.
The firm filed a claim for the monetary value of the cryptocurrency after the defendant failed to engage in pre-action correspondence.
“We identified cryptocurrency within three wallets as the only known assets to enforce our clients’ judgement against and applied to the High Court for a freezing injunction, disclosure and preservation order,” Daniel said.
“We were successful in obtaining a default judgment value of £130,000.”
He said the case highlights the risks of cryptocurrency scams.
“Courts are alive to the fact that more people are being scammed and are looking for redress to get their money back, so are willing to provide a number of remedies to assist claimants in doing so,” Daniel said.
“Scams are more common now as crypto becomes more attractive as an investment. Because it can be quite complicated, unsophisticated investors may not really understand how cryptocurrency works. A fraudster posing as a trusted investment manager will say they can do it all for you, leaving an individual ripe to be taken advantage of.”
Daniel added that although rules now exist around marketing and promotion of cryptocurrencies, it is still largely unregulated.
“As with any ‘get rich quick’ scheme, if it sounds too good to be true, it most probably is,” he said.
“Our advice is always to do your research before investing. Check with the Financial Conduct Authority (FCA) as to whether the company, prospective investment manager and the exchange they propose to use is FCA-regulated and registered and, if an FCA registration number is provided on a company website, that the company matches the one actually on the register.”
“Prospective investors should also keep an eye on what kind of scams are out there and be aware of advances in regulation.”
