Self-managed super funds (SMSFs) have become increasingly popular in recent years, particularly among those who are interested in investing in cryptocurrencies. However, as the Australian Securities and Investments Commission (ASIC) has warned, SMSFs that invest in cryptocurrencies can be particularly vulnerable to scams and other fraudulent activities. In this article, we will explore the issue of cryptocurrency scams on SMSFs and what investors can do to protect themselves.
Scammers have become increasing elaborate with fake social media profiles including Linkedin company pages that will show in some cases 100+ employees. These scammers are directly targeting SMSF’s and their funds which makes the following so important.
Consider the Risks:
According to the ASIC, before setting up an SMSF to invest in cryptocurrencies, investors should consider the risks associated with these investments. Cryptocurrencies are notoriously volatile and can experience large fluctuations in value in a short period of time. Additionally, cryptocurrencies are not regulated in the same way as traditional investments, which means that they can be particularly vulnerable to scams and other fraudulent activities.
Furthermore, investors should also be aware that SMSFs that invest in cryptocurrencies may not be able to access the protections offered by the Australian government’s compensation scheme. This means that if a scam or fraud occurs, investors may not be able to recover their lost funds.
Do Not Rely on Social Media or Cold Calls:
Another warning from the ASIC is that investors should not rely on social media or cold calls when considering investments in cryptocurrencies. Scammers often use social media and cold calls to lure unsuspecting investors into fraudulent investment schemes.
According to the ASIC, investors should be wary of unsolicited calls or emails offering investment opportunities in cryptocurrencies. Investors should also be wary of social media posts that promise high returns with little risk.
Understand the Risks of Cryptocurrencies:
There is a reason why Cryptocurrency is not currently offered under the professional financial service’s advice based model, the risk is still high. Before investing in cryptocurrencies, it’s important for SMSF investors to understand the risks associated with these investments. Cryptocurrencies are highly volatile and can experience large fluctuations in value in a short period of time. Additionally, cryptocurrencies are not regulated in the same way as traditional investments, which means that they can be particularly vulnerable to scams and other fraudulent activities.
According to the ASIC, SMSF investors should also be aware of the potential for cyberattacks and other security breaches when investing in cryptocurrencies. SMSF investors should take steps to ensure that their investments are secure, such as using cold storage wallets and two-factor authentication.
Work with a Registered Financial Adviser:
To avoid falling victim to cryptocurrency scams, SMSF investors should work with a registered financial adviser. A financial adviser can provide valuable advice on the risks and benefits of investing in cryptocurrencies and can help investors develop a strategy for managing their investments.
According to the ASIC, investors should also ensure that their financial adviser is licensed to provide advice on SMSF investments. Investors can check the register of financial advisers on the ASIC’s MoneySmart website.
Look for Austrac registration, Blockchain Australia membership and review all of their links to ensure you are dealing with the correct company.
SMSF investors should consider the risks associated with cryptocurrencies, avoid relying on social media or cold calls, understand the risks of cryptocurrencies, work with a registered financial adviser, and take steps to ensure that their investments are secure. By taking these steps, SMSF investors can reduce the risk of falling victim to cryptocurrency scams and other fraudulent activities.
