Fake Profits, Real Losses: Inside the Crypto Scam Sweeping Through Messaging Apps

Australian regulators are intensifying warnings over a growing wave of cryptocurrency investment scams that are using messaging apps and social media platforms to lure victims into fraudulent trading schemes.

The Australian Securities and Investments Commission (ASIC) has issued a fresh alert following similar concerns raised by the Australian Competition and Consumer Commission (ACCC). Authorities say scammers are increasingly targeting people who join online “share trading” or “stock tips” groups, where fake investment opportunities are promoted through highly organised networks.

According to ASIC, the schemes often centre around fraudulent crypto-asset trading platforms designed to appear legitimate. Victims are shown fabricated account balances, fake profits and simulated trading activity to create the illusion of successful investments. In reality, no genuine trading takes place, and all deposited funds are transferred directly to scammers.

The warning highlights how fraudsters are exploiting the growing popularity of cryptocurrency investments, particularly among younger investors who are heavily exposed to financial content on social media.

Contents

01

How the scam unfolds

02

Young investors increasingly exposed

03

Regulators urge caution

How the scam unfolds

Authorities said scammers typically begin by placing advertisements or posts on social media platforms claiming to provide profitable stock trading advice or insider investment tips. Interested users are then invited into messaging groups on applications such as WhatsApp.

Inside these groups, scammers impersonate well-known financial figures or experienced traders in an attempt to build credibility. Victims are encouraged to trust investment recommendations shared within the group and are eventually directed to a crypto trading platform controlled entirely by the fraudsters.

The platforms are designed to imitate legitimate exchanges. Users may see apparently active trades and rising profits displayed on their accounts, reinforcing the belief that their investments are performing well.

However, ASIC stated that the data displayed on these platforms is entirely fake. No actual crypto assets are purchased, sold or held on behalf of investors.

The deception often becomes clear only when victims attempt to withdraw their money. At that stage, scammers demand additional payments, claiming these are necessary withdrawal fees, taxes or commissions required to release the funds.

Even after these payments are made, investors remain unable to access their money because the original deposits were never invested in genuine assets. Instead, the funds are transferred directly into accounts controlled by the scammers.

Regulators also warned that criminals are increasingly targeting victims of earlier investment fraud through so-called recovery scams. In these cases, scammers approach individuals who have already lost money and falsely claim they can help recover the stolen funds, only to defraud them again.

Young investors increasingly exposed

Recent research by ASICs Moneysmart programme suggests younger Australians are particularly vulnerable to crypto-related scams due to their high engagement with social media investment content.

A survey involving 1,127 Australians aged between 18 and 28 found that nearly one-quarter of respondents already own crypto assets, including cryptocurrencies and non-fungible tokens (NFTs).

Among those investors, around two-thirds described their approach as short-term or speculative, indicating a stronger focus on rapid gains rather than long-term financial planning.

The findings also showed that 29% of respondents engage in short-term trading influenced by social media personalities. More broadly, 72% of Gen Z participants reported seeing crypto-related advertisements online, while 41% said they had been directly approached about crypto investment opportunities.

The figures have raised concerns among regulators that younger consumers are being heavily exposed to high-risk financial promotions and sophisticated online scams disguised as investment advice.

Regulators urge caution

As part of its warning campaign, the ACCC released visual examples of the scams, including fake cryptocurrency WhatsApp groups, fraudulent investment messages and counterfeit trading platforms designed to mimic legitimate services.

Authorities are urging consumers to verify whether businesses offering crypto-related services are properly registered with AUSTRAC, Australias financial intelligence agency responsible for enforcing anti-money laundering and counter-terrorism financing rules.

Under Australian law, businesses that exchange money for virtual assets must comply with strict registration and regulatory requirements.

ASIC and the ACCC have both advised investors to remain cautious of promises of guaranteed profits, unsolicited investment approaches and platforms that pressure users into making urgent payments before allowing withdrawals.