This year, cryptoassets once again take center stage in the alert systems of securities regulators. It must be said that 2022 was quite rich in crypto dramas, and social networks acted as a perfect amplifier.
As of 2022, it has already been written that the pandemic, with its low interest rates and the resulting savings glut, has spurred on a new generation of investors and created fertile ground for speculation, fueling the allure of crypto assets and igniting the universe of “meme” stocks that have gone viral.
The obsession with spontaneous acquisition of foamed shares in social networks for the purposes of mimicry, solidarity or even shareholder activity has expanded the scope. “Due to the vastness of the Internet and the use of social media, in particular instant messaging applications that allow the creation of private exchanges and discussion groups, regulators are often unable to intervene preemptively,” laments the Autorité des Financial Marches (AMF).
It should be added that this side effect of the pandemic has led to an acceleration of fundamental changes already taking place under the influence of technological innovations and the robotization of the trading market. This has been backed up by a drastic reduction, if not elimination, of transaction fees, typically without access to non-robot advisors or financial planners.
Everything came together last year. As a result, the number of complaints about crypto assets received by AMF last year was 474, which is almost 75% more than in 2021 and 11.5 times more than 41 complaints in 2020, according to data collected by La Presse+. On its website, the Authority provides a list of sites and platforms with potentially dangerous activities or with a warning that extends to pages and pages. The market capitalization of the crypto universe may have shrunk by two-thirds in the last year and today stands at around $1 trillion, with around 22,700 crypto assets currently traded on CoinMarketCap and over 550 platforms with daily trading volumes in excess of the US. 50 billion dollars.
With this fraud prevention month of March, AMF returns to the weight of social networks, which is especially felt in the crypto universe. “When they want to invest on their own, consumers increasingly prioritize social media as a source of information or too often misinformation about financial products and services,” said Louis Morisset, p.- in a press release, CEO of the Office. “Thus, their financial decisions are increasingly dependent on “influencers”, whose goal is often not to adequately inform their audience, but to get the most views or clicks or to profit financially from the securities craze. or crypto-assets in which they sometimes invested themselves. »
Contact made under the influence of advertising in social networks, building trust, high returns that fluctuate, FOMO syndrome (for fear of missing out), this fear of missing out, especially exploited in networks … One of the main records of points for fraud is at the level of the initial emission of crypto assets or tokens, known by the English abbreviation ICO. “ICOs operate in an environment conducive to manipulation and fraud. The creation of tokens is easily accessible from a technological point of view, and their marketing on certain decentralized exchange platforms is just as easy, without any intervention or permission from a third party. […] It is very easy to find sites on the Internet that explain how to create tokens and how to make them available for trading on the blockchain in a few minutes,” reminds AMF. Moreover, many of these tokens can be bought or exchanged on decentralized and robotic platforms.
Youth at risk
From a broader perspective and within this larger digital universe, the Annual Fraud Survey published by Chartered Professional Accountants of Canada (CPA Canada) found that, despite numerous reports of scams specifically targeting the elderly, three out of five (63% ) aged 18-34 say they have been the victim of at least one type of financial fraud in their lifetime – this number drops to 39% for people aged 35-54 and 31% for people aged 55 and over.
“The use of online services and personal devices in everyday life is becoming commonplace, especially among young people. […]. The more we go online, the more we succumb to fraud. Therefore, great caution is required,” we read.
In this study, credit card fraud remains the top financial fraud for 21% of credit card users, followed by email or phishing fraud (8%) and debit card fraud (8%).