Security & Fraud

Suspect Caught In Alleged London Cryptocurrency Fraud

Ding, ding, ding! And the winner of the newest frontier of financial fraud is cryptocurrency.

Since the beginning of this year, businesses have raised $1 billion in initial coin offerings (ICO), and Goldman Sachs is seeing 800 altcoins circulating around the internet. As cryptocurrency increases in popularity, it has attracted dangerous minds. With many looking to find holes in the often proclaimed “most impenetrable” financial system, it was just a matter of time before a hacker or fraudster found its way inside.

In London, police have made an arrest of a man suspected of setting up a so-called “boiler room” for selling false cryptocurrency to various investors. The official charges, as reported by the Financial Times, include conspiracy to defraud as well as money laundering.

A spokeswoman for the London police shed light on the arrest.

“The man is thought to be part of a group which allegedly set-up a ‘boiler room’ on Old Broad Street (EC2), which has allegedly been used to persuade people to invest in the cryptocurrency,” the spokeswoman said. “Victims were cold-called by sales people who allegedly persuaded them to invest in a cryptocurrency which does not exist and is therefore worthless.”

With cryptocurrencies slowly working their way into more mainstream uses — used by scores of big name companies which includes the likes of Microsoft — it is likely we will end up seeing more fraudulent activities surrounding the payment method.

Figuring out a way to do the unthinkable when it comes to hacking will be a tough wall for fraudsters to break down, but the authorities will likely be on high alert and ready for the next incident. Depending upon the severity of punishment for this arrest, would-be hackers may think twice before trying to push the cryptocurrency boundary.

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