As digital currencies gain traction, financial editor shares hard-won lessons to help consumers avoid the traps
Cryptocurrencies have redefined the global financial landscape, offering bold new opportunities for investment and digital transactions. Yet for many South Africans, this fast-paced virtual economy remains an intimidating maze—one filled with hidden risks, misinformation, and high-profile scams.
“I’ve seen stories of people who invested in Bitcoin or Ethereum at the wrong time, lost thousands to scam platforms, or blindly followed advice from influencers promising instant wealth,” said Dieketseng Maleke, editor of Personal Finance, reflecting on the often-chaotic reality facing many first-time investors.
Maleke’s insights come from personal experience. “A few years ago, I was approached by someone claiming they had a guaranteed investment strategy that would double my money in a month,” she recalled. “I hesitated, although the numbers looked convincing, and the platform was filled with ‘success stories’ of investors who had allegedly made millions.”
Despite the allure, Maleke trusted her instincts and did some digging. “After checking the provider’s credentials, I discovered it wasn’t licensed by the Financial Sector Conduct Authority (FSCA). Just weeks later, the platform disappeared, taking countless investments with it.”
That close call was a wake-up call. “That moment solidified my belief: knowledge is your best weapon in the world of crypto.”
Crypto assets are essentially digital currencies that operate via blockchain technology—a secure, decentralised system that keeps all transactions verifiable and immutable. Two of the most prominent crypto assets are Bitcoin and Ethereum.
Bitcoin, often dubbed “digital gold,” functions mainly as a long-term investment. Ethereum, while also a digital currency, provides additional capabilities like smart contracts and decentralised applications. But with great potential comes equally great volatility.
“Prices can skyrocket and crash within days,” Maleke noted. “Meaning there’s as much risk as there is reward.”
As interest grows, so too does the scale and sophistication of crypto-related fraud. Following the FSCA’s 2022 recognition of crypto as a financial product, scammers have begun targeting not just novices but also seasoned investors.
A study by cybersecurity firm Kaspersky revealed that more than half of South African users had fallen victim to crypto scams, with only 24% feeling confident about their understanding of the risks.
“Scammers know how to play on emotions, promising fast money with low effort,” Maleke said. “That’s why recognising red flags is critical.”
The FSCA highlights five common warning signs:
- Fake Websites – These mimic real crypto exchanges to trick users into transferring funds.
- Unrealistic Returns – Promises of huge, guaranteed profits usually signal a scam.
- Requests for Additional Deposits – Genuine platforms do not ask for more money before allowing withdrawals.
- “No Experience Needed” Pitches – Claims that trading requires no knowledge should be avoided.
- Celebrity Endorsements – Many scams use fake endorsements to appear legitimate.
To address this growing threat, the FSCA began licensing Crypto Asset Service Providers (CASPs) in 2023. Consumers can now verify if a platform is registered before committing their funds.
“If a platform isn’t licensed, avoid it completely,” Maleke warned.
Those who suspect fraudulent activity can contact the Financial Advisory and Intermediary Services (FAIS) Ombudsman at the FAIS Complaints Portal, email info@faisombud.co.za, or call (012) 762 5000 / 086 066 3274. The FSCA Consumer Help Centre can also be reached at 0800 20 3722.
Maleke’s message is clear: education is the strongest defence. “Crypto is an exciting new space, but it’s also one where bad actors thrive. The best way to protect your wealth is to educate yourself, use regulated service providers, and never invest blindly.”
And for those tempted by fast returns? Maleke offers this final word of caution: “If something feels too good to be true, it probably is.”
