Crypto-assets are high-risk. Their value can fall sharply or to nothing, and you can lose all the money you put in. Fraud involving crypto-assets is widespread.
Evergreen Study writes about safety and scam awareness. Because the topic is closely connected to crypto-assets, we want every reader to understand the main risks clearly.
Main risks
- Fraud. Fake platforms, impersonation, phishing and relationship scams cause large losses. Our guides describe the common patterns.
- Irreversible transfers. A transfer recorded on a blockchain normally cannot be cancelled. Mistakes and fraudulent transfers are rarely recovered.
- Loss of keys. If a recovery phrase or private key is lost, access to the funds is usually lost for good. If it is stolen, the thief can take the funds.
- Volatility. The value of crypto-assets can change dramatically within hours.
- Limited protection. Crypto-assets are generally not covered by deposit protection or investor compensation schemes in the way bank deposits are, and protections vary between countries.
- Provider failure. Firms that hold crypto-assets for customers can collapse, be hacked or behave dishonestly.
- Technical risk. Software, including wallets and smart contracts, can contain flaws that lead to losses.
- Legal and tax risk. Rules differ between countries, change over time, and may create tax obligations.
Our position
We do not encourage anyone to acquire crypto-assets and we give no advice about doing so. Before any financial decision, check your national regulator's register and warning list, and consider independent advice from a licensed professional.
More from official sources: FCA ScamSmart (UK) and ESMA warnings and publications (EU).