Crypto Exchanges Focus on Communication to Help Users Avoid Scams

Cryptocurrency exchanges in Australia are taking proactive measures to protect users from scams, focusing their efforts on direct communication to "break trust" between victims and scammers. Executives from major Australian exchanges recently came together at the Intersekt 2023 conference in Melbourne to discuss the growing threat of crypto fraud.

The panel, featuring leaders from Cointree, CoinSpot, Swyftx and blockchain analysis firm Chainalysis, outlined various techniques exchanges deploy to keep users safe. These include automated and manual AML checks, investigations, educational resources and increased engagement with users.

According to CoinSpot's AML officer Jedda Stocks-Ramsay, speaking directly with users has proven highly effective. He explained that the exchange aims to have at least one conversation with each customer over the lifespan of their account.

Direct Communication Disrupts Scammer Tactics

This direct communication serves an important purpose - it works to "break trust" scammers try to build with their marks. Scammers often spend significant time fostering relationships with potential victims. A simple check-in email or call from the exchange at the right moment could prevent the scam altogether.

As Stocks-Ramsay noted, "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.”

Swyftx's Jason Titman echoed the need for proactive communication with users. But he stressed education as another critical element in the fight against fraud. Many consumers still lack a solid grasp of crypto and blockchain concepts, leaving them vulnerable to social engineering and phishing attacks.

Crypto Scams Require Industry-Wide Response

The discussion highlighted that responsibility for combating crypto crime extends beyond just the exchanges. Banks, telecom providers, social media platforms and other businesses all have a role to play.

As Stocks-Ramsay pointed out, "Cryptocurrency is just one industry within the scams ecosystem." Scammers exploit vulnerabilities wherever they exist across industries.

Cointree CEO Jess Renden further emphasized that crypto scams are not solely the fault of exchanges or blockchain technology itself. She noted that exchanges are in constant communication with regulators and partners in other sectors to close loopholes.

"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,” she remarked.

Crypto Scams in Australia on the Rise

The push by Australian exchanges to combat scams comes as losses accelerate. In 2022, Australians lost around $150 million to crypto investment scams using cryptocurrency as the payment method according to the country's consumer protection agency. This represents a more than 160% increase compared to 2021.

Earlier in 2023, major Australian banks claimed 40% of all scams involved cryptocurrency. The claim came amidst some banks restricting crypto transactions over scam concerns.

The news highlights increased focus on user protection by exchanges as crypto scams proliferate globally. Proactive communication paired with education gives users the knowledge needed to avoid frauds. But responsibility extends across industries, requiring coordinated efforts to disrupt scammer operations.

As cryptocurrency gains mainstream traction, consumers need access to secure marketplaces and transparent guidance to transact safely. Exchanges deploying direct engagement, ground-level education and inter-industry collaboration provide a model for effectively combating crypto crime over the long-term.

The Path Forward - Empower Users, Increase Accountability

The discussion at Intersekt 2023 makes clear that denying users access to cryptocurrency to avoid scams is not the answer. This only stifles innovation in the emerging digital economy. The path forward is user empowerment through education and transparent communication paired with increased accountability for all players.

Exchanges must continue providing the resources users need to identify scams and transact safely. Banks, social media platforms and other facilitators of economic activity online likewise require motivation to implement protections, whether through regulation or otherwise.

Scammers will always seek to exploit new technologies for illicit gain early on. But the growth of cryptocurrency and blockchain depends on users having faith in its underlying security and integrity. This demands proactive measures industry-wide to disrupt scammer operations through empowering users with knowledge and direct accountability.

What Role Should Government Play in Crypto Scam Prevention?

Government has an opportunity to support industry efforts without stifling innovation. Measures like standardized consumer warnings could help users identify risks across platforms. Investing in public awareness campaigns around fraud prevention would also prove beneficial.

Clear regulatory frameworks give businesses defined responsibilities in user protections while allowing room for continued growth. Guidelines for inter-industry coordination could accelerate information sharing and faster scam response.

A heavy-handed regulatory approach risks constraining beneficial applications of cryptocurrency and blockchain technology. But prudent government support and oversight reinforces industry scam prevention and instills user confidence. With the right balance, policy and regulation can nurture the growth of a secure, innovative crypto space.

Will Communication and Education Be Enough to Curb the Growth of Crypto Scams?

Expanding communication and education provides a strong starting point but will require ongoing enhancement to match the evolving tactics of scammers. As cryptocurrency penetrates deeper globally, more users with minimal background knowledge will enter the space.

Simply providing information is unlikely to prove sufficient over the long-term. Exchanges and partners across sectors will need to implement stronger identity verification, utilize blockchain analytics to identify high-risk transactions, and provide direct warnings to users of suspected fraud risks.

Maintaining the human touch through direct communication offers advantages but cannot scale infinitely. Automated protections, BC analytics, and default security settings on platforms may become necessary supplements.

User-centric design combined with proactive security layers and industry coordination gives the best chance of denying scammers the oxygen they need to operate. But anticipating emerging scam tactics through data analysis and research will remain essential to providing a secure crypto environment.

Subscribe to BTC Peers

Don’t miss out on the latest issues. Sign up now to get access to the library of members-only issues.
jamie@example.com
Subscribe