Responsibility for crypto scams does not only belong to the cryptocurrency industry, it also involves banks, telecoms and social media platforms, Australian exchanges say.
Cryptocurrency exchanges in Australia have been increasingly communicating with their users as part of preventative measures for scams. According to local crypto firms, such communication is the key to preventing scams as it is able to “break trust” between victims and scammers.
Executives at major Australian crypto firms like Cointree, CoinSpot and Swyftx on Aug. 31 met at a panel of the fintech conference Intersekt 2023 in Melbourne to discuss the issue of scams and fraud in crypto.
At the panel, the executives mentioned a variety of measures taken by the platforms in order to protect their users from fraud, including automated and manual Anti-Money Laundering (AML) checks, investigations, education and communication.
According to CoinSpot AML officer Jedda Stocks-Ramsay, the firm has been particularly focused on “just talking” to its customers as it found it really effective.
“We find that we'll speak to our customers at least once over the course of their life or the course of their life on their account with us,” Stocks-Ramsay stated. He noted that talking about scams is the key factor because there's a social engineering aspect to that.
CoinSpot has been particularly focused on helping customers understand the issue of trust that scammers attempt to build with their victims, Stocks-Ramsay said. The exec stressed that scammers often spend hours on the phone with victims, and a simple email from the exchange could help users to avoid this altogether. He added:
“One really effective way we find of breaking that trust or at least planting the seed for the victim to question it is talking to them and giving them that human element because that's what the scam is doing.”
Alongside communication, education is another important component of protecting crypto users, Swyftx executive Jason Titman noted. He stressed that often, the reason individual consumers are susceptible to being tricked into disclosing their personal data and passwords to scammers is due to lack of education.
“It's always been important because, as this is a new asset class, we've been educating our customers, particularly something that's very relevant and important,” he noted.
The panel speakers also highlighted the importance of educating users beyond just the cryptocurrency industry.
Cryptocurrency is “just one industry within the scams ecosystem,” Stocks-Ramsay said, adding that many other industries are involved in crypto scams, including social media, banks, telecoms and others.
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Cointree CEO Jess Renden agreed with the CoinSpot exec, stressing that cryptocurrency scams are “not crypto’s fault.” Crypto firms in Australia have been actively communicating with regulators and other businesses, be it telcos or social media platforms, she said, adding:
“Our industry is constantly sort of badgered saying that it's our fault and it's up to us. And I think all of you today have seen the measures we go through to try and protect customers.
The news comes a few months after Australia's major banks argued that 40% of scams involve cryptocurrency in order to defend the decisions of certain local banks that restricted some crypto transactions over scams in early June 2023.
According to data from the Australian Competition and Consumer Commission, local people lost roughly $150 million from investments where cryptocurrency was used as the payment method in 2022. The amount is up more than 160% from 2021.
Additional reporting by Cointelegraph author Tom Mitchelhill.
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