Cryptocurrency fraud cases rise despite low incidence rates in South Africa

Luno data shows crypto-related scams affect under 1% of users, with romance and recovery schemes among most common fraud types. Platform handled 516 scam-related queries in three months across 14 million customer base.

Christo de Wit, country manager for SA, Luno.

Recent data from Luno, a cryptocurrency trading platform operating in South Africa, indicates that while crypto-related scams impact less than 1% of their 14 million customers, fraudulent activities remain the primary form of digital currency crime.

The platform recorded 516 scam-related customer inquiries over a three-month period. According to Christo de Wit, Luno's country manager for South Africa, financial losses vary considerably, with individual cases ranging from small amounts to substantial sums exceeding R4 million.

One documented case involved a South African customer who maintained correspondence with a fraudster over four and a half years, completing over 80 transactions totaling R4 million before recognizing the deception. The scammer claimed to require funds for legal expenses while imprisoned.

Another incident involved a customer who experienced account compromise due to password reuse across multiple financial platforms. The breach of the customer's email account provided access to cryptocurrency holdings and sensitive financial information.

De Wit reports that some customers receive multiple warnings about suspicious transactions but proceed despite alerts. One customer received education about scam risks over 10 occasions within two years, acknowledged being defrauded, yet subsequently lost nearly R200,000 in another scheme.

Platform data indicates that South African males aged 20-40 represent the highest-risk demographic for cryptocurrency fraud, followed by women aged 20-30, and females aged 55 and above. The past three months showed equal distribution between male and female customers reporting scam incidents to Luno.

Analysis suggests that fraud victims frequently pursue high-risk investments seeking rapid returns, a behavioral pattern that scammers exploit through promises of excessive profits.

A developing trend involves customers unknowingly participating in money laundering operations. Funds are deposited into personal bank accounts, with customers retaining small percentages while transferring remainder amounts to cryptocurrency wallets for distribution, unaware of their role in illegal financial activity.

Additional fraud methods include phishing attempts, impersonation of Luno personnel, false financial advisory services promising guaranteed returns, and technical errors where customers attempt transfers to incompatible wallet systems or networks.

Luno has implemented fraud detection systems that identify suspicious behavior patterns and maintains partnerships with blockchain analytics companies for crime prevention. The platform issues warnings for potentially fraudulent transactions.

Due to blockchain technology's decentralized structure, cryptocurrency transfers are generally irreversible once completed. This characteristic attracts users seeking financial autonomy but eliminates traditional banking safety mechanisms, requiring individual responsibility for asset security.

The company maintains collaborative relationships with regulatory bodies including the Financial Intelligence Centre (FIC), Financial Sector Conduct Authority (FSCA), and South African Reserve Bank (SARB). Luno responds to official inquiries and legal requests related to criminal investigations.

The platform participates in FSCA initiatives to develop a Financial Education Charter designed to improve cryptocurrency literacy among South African users. Company representatives emphasize customer education as a primary defense against sophisticated fraud schemes.

De Wit states that building user trust through law enforcement cooperation forms part of the company's operational strategy, while encouraging customers to develop knowledge about cryptocurrency transaction security and best practices.