Alongside Market Relief Package, US CFTC Warns of COVID-19-Linked Crypto Scams

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United States derivatives markets regulator, the Commodity Futures Trading Commission (CFTC), has joined the list of global authorities warning the public against cryptocurrency scammers trying to capitalize on the widespread coronavirus fears.

In a statement issued on March 19, the CFTC highlighted that fraudsters commonly use major news events like the spread of COVID-19 in order to add credibility to their scam schemes or manipulate emotions.

CFTC sees increased complaints involving crypto or forex-related scam schemes

According to the statement, the agency has received hundreds of fraud complaints involving online digital assets or forex-related fraudulent schemes that promise to deliver fast and huge returns amid the intensifying coronavirus concerns.

The CFTC further outlined that coronavirus scammers don’t just stop at defrauding people into putting their money to fake investment schemes. According to the regulator, fraudsters also request unnecessary fees for cashing out and tax payment.

The statement by the CFTC reads:

“After depositing a few hundred dollars of cryptocurrency, the traders are fed a number of fake statements showing huge returns. When the traders try to cash out, they’re told they must first pay a fee to get their earnings. They pay the fee, then are told they need to pay a tax, then more fees, and so forth. Never send more money to get what is yours.”

Commission grants temporary relief to a number of market participants in response to the COVID-19 pandemic

In conjunction with warning investors about scammers taking advantage of coronavirus news, the CFTC also granted temporary no-action relief to a number of companies. According to a 20 March statement, market participants like futures commission merchants, brokers and dealers are temporarily exempt from certain CFTC regulations that are difficult to achieve due to interventions such as social distancing and closures in response to the COVID-19 pandemic.

Cointelegraph has reached out to the CFTC to find out more details about the recent surge in complaints related to crypto scam schemes. This article will be updated pending any new information.

Earlier in March, the CFTC also warned the public against scammers trading trying to benefit from the increased market volatility. On the Black Monday, March 9, the CFTC issued a warning statement, urging investors to beware of social media posts that tout digital assets and forex and make sure that they are registered with the agency before “sending bitcoin or credit card info.”

More coronavirus-related scams involving crypto

As reported by Cointelegraph, a number of governments have already warned the public about the outbreak of crypto scams trying to capitalize on the widespread fears relating to COVID-19. According to a March 19 report, online scammers were impersonating the World Health Organization (WHO), claiming that they were collecting crypto donations to fight the COVID-19 pandemic.

On March 11, the United Kingdom’s Financial Conduct Authority issued a warning about coronavirus scammers using all the possible ways to mislead people into giving them money, including fake investments in crypto assets. Previously, the U.K. police also warned about coronavirus scammers requesting payments in Bitcoin (BTC).