SMSFs warned on bitcoin-related scams
SMSF trustees have been told to watch out for phishing scams involving fake bitcoin exchange websites, with cyber criminals looking to exploit the cryptocurrency craze.
ASF Audits executive general manager of technical services Shelley Banton said while the high-risk and volatile nature of crypto assets has seen many SMSF professionals discouraging clients from purchasing bitcoin (BTC), it hasn’t stopped SMSF trustees investing in them.
“Irrational returns on BTC will result in SMSF trustees taking further positions and investing in additional crypto assets for fear of missing out,” said Ms Banton.
The hype around cryptocurrency, she warned, has seen a number of phishing schemes emerge in the past couple of years, with the Australian Competition and Consumer Commission (ACCC) receiving 245 reports of bitcoin-related scams in October 2016 with losses totalling $92,000.
While there are many safeguards protecting BTC wallets against hackers and scammers, such as two-factor authentication and encryption, a lot of the scams, she said, involve fake website that mimic legitimate websites and steal a user’s account details when they try to log in.
“Even the most alert and tech-savvy SMSF trustee can be taken in by scammers who can manipulate Google Search results and direct traffic to a fake, cloned BTC exchange website,” she said.
Ms Banton said there have also been examples where other types of cryptocurrency have collapsed due to cyber security incidents.
The most notable one she cited was with The DAO, another type of cryptocurrency which at one point raised over $34 million in 2016 through a crowdfunding campaign.
“When hackers found and exploited a vulnerability in the technology, they siphoned off one-third of The DAO’s funds, resulting in traders dumping The DAO by the truckload,” she said.
“There’s no doubt that the frequency and impact of cyber security incidents will continue to increase and adversely affect crypto assets.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.