A recent BaFin study shows investors aged 18-45 increasingly use social media for financial advice.
The Financial Conduct Authority has prosecuted Daniel Pugh, who was found guilty of operating a Ponzi scheme and committing fraud. Pugh ran the scheme through a company called the Imperial Investment Fund. He raised over £1.3 million from 238 investors, most of whom were recruited via Facebook advertisements.
Fraudsters commonly use social media platforms such as Facebook, X, Telegram, WhatsApp, YouTube, TikTok, and Instagram Reels to target retail investors. A recent study by the German regulator BaFin confirms a growing reliance on these platforms for financial advice, increasing investors' exposure to scams.
Social media allows retail investors quick access to financial information but also increases their risk of falling victim to fraudulent schemes. The North American Securities Administrators Association highlighted scams involving digital assets, cryptocurrency, and social media marketing in its annual list of threats. This list is based on a survey of securities regulators in the US and Canada, which identified common platforms used by fraudsters.
The BaFin study found that investors aged 18 to 45 increasingly turn to social media for financial advice, especially on cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term. More than half of Millennials and Gen Z respondents consider social media a valid alternative to traditional financial guidance.
To address the rise in online fraud, regulators have started using social media to warn investors. The Cyprus Securities and Exchange Commission launched a campaign to combat scams falsely claiming affiliation with CySEC. The campaign advises investors not to share personal data and clarifies that CySEC CySEC The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision The Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory authority of Cyprus. CySEC is one of the key watchdog authorities for brokerages in Europe, whose financial regulations and operations comply with the European MiFID financial harmonization law.Founded in 2001, CySEC is instrumental in providing licensing and registration for forex brokers and previously binary options providers.CySEC is responsible for a variety of different functions, which includes the supervision Read this Term does not send unsolicited emails or request money.
Pugh's scheme promised unusually high returns of 1.4% per day, 7% per week, or 350% per year. At trial, he was convicted of one count of conspiracy to defraud. He had earlier admitted to carrying out unauthorised regulated activity, breaching sections 19 and 21 of the Financial Services and Markets Act 2000.