New measure that High Street banks are taking to limit their liability in Cryptocurrency scams

As fraud continues to expand relentlessly, assisted by the increasing attractiveness of cryptocurrency, a digital asset that is often little understood by novice investors. The popularity of cryptocurrency, for some people, arises due to its decentralised structure that remains outside the control of governments and other authorities and removes third parties which enables speedier and cheaper money transfers. Also, there can be no central point failures. Cryptocurrency’s volatility is generally seen as a disadvantage, however, wrongdoers often imply that it is possible to make far greater returns on investment provided that large sums of money are invested quickly. This, in turn, often makes the novice investor rush to hand over vast amounts of money to the fraudsters.

Giambrone & Partners banking and financial fraud litigation lawyers, when assisting our defrauded clients, have had considerable success in recovering their lost funds if the customer paid the fraudster with a debit or credit card, through a procedure known as chargeback read more here. This compels the bank to repay losses in certain circumstances, namely, if a product or a service is proved to be inferior and not as described or was not provided at all and also most relevant it can be invoked if the customer was a victim of a fraud or scam under section 75 of the Consumer Credit Act 1974, whereby the bank, as the entity that issued the card, assumes creditor liability. 

Demetri Bezaintes, an Associate, notes “Two banks, HSBC and Nationwide, have today announced that they are now restricting their customers who use credit or debit cards to buy crypto assets to a limit of £5,000 per day” Demetri further commented “these measures are designed not only to protect their customers from losing their life savings in fraudulent crypto scams but also to avoid the cost of the investigations into suspected fraud and the consequential repayments. Perhaps the most compelling reason for the banks is to avoid being caught by the expansion of the Financial Conduct Authority's (FCA) regulatory framework aimed at protecting consumers which will place a greater liability on banks to protect their customers.”

Other banks such as Lloyds, National Westminster and Santander have also invoked restrictions and other measures to limit their liability arising out of their customers’ investments with brokers that may not be authorised.

Our lawyers recognise that until a way is decided upon to regulate and legislate for the avoidance of cryptocurrency fraud consumers are vulnerable. Prior to Giambrone & Partners’ ground-breaking case involving the service of legal documents via an NFT through the blockchain, the fraudsters brazenly hid behind their anonymity, confident that no action could be taken against them as in normal course unless the wrongdoer is identified as service of any legal order cannot be achieved. Our highly experienced lawyers know only too well that each time a successful strategy is developed to target fraudulent schemes and the perpetrators, another one will swiftly arise.  Therefore, we constantly scrutinise the investment market for new scams in order to develop strategies to overcome the next type of investment fraud.

If you suspect that you have been caught up in a cryptocurrency investment scam the sooner you seek expert legal advice the better the chance of recovery. 

Demetri Bezaintes has a thorough knowledge of investment fraud and fund tracing. He works tenaciously for our clients, advising on cryptocurrency, Forex trading disputes and regulatory investigations. He draws his expertise in investment law from his experience in the banking sector and his studies in banking and financial services regulation. Before joining Giambrone & Partners Demetri worked at an international bank, where his main focus was the enforcement of freezing orders and third-party debt orders. He approaches cross-border jurisdiction matters with a comprehensive view, based on his knowledge of both civil and common law. 

If you believe that you may have been targeted in a cryptocurrency scam please contact us at clientservices@giambronelaw.com or click here.