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Virtual currency crime spikes in South Africa

Virtual currency crime spikes in South Africa

Peer-to-peer (P2P) bitcoin marketplace and digital wallet provider Paxful says according to cyber security experts, virtual currency related crime is on the rise in South Africa – with hackers using people's phones to mine cryptocurrencies.

The company says South Africa is one of its top markets and it processes over 50,000 trades a day. It has noticed a 2800% increase in trades from South Africa in October 2019 compared to the same period last year.

In a media statement, Paxful said Johannesburg, Pretoria and Cape Town are the three cities that dominate in the number of users, and overall the number of trades across Africa has grown by 64% when comparing the same time period.

The company believes that whilst the vast majority of cryptocurrency trades are safe, in recent years, the sector has not proved completely immune to scams and fraudulent transactions. With the cryptocurrency industry still fairly new, scammers prey on users who lack the appropriate awareness in this space.

Ray Youssef, co-founder and chief executive officer of Paxful, said, "Bitcoin is secure but sometimes the way we use it is unsafe. We have to treat bitcoin like cash and protect our personal information and passwords the same way we do when we use an ATM or shop online. Once your bitcoin is in the hands of hackers and scammers, it is irreversible, so to have the necessary safeguards in place is critical."

He added: "For more and more people all over the world, P2P finance is their only hope for financial inclusion and empowerment. While it's not possible to completely eliminate the risk of crypto fraud and theft, by taking a few simple precautions you can substantially reduce your chances of becoming a victim."

The company advises users to protect their identities and keep information such as PINs, phone numbers, email addresses and passwords safe. Additionally, users are urged to keep a look out for bitcoin scams or those that take place in the crypto space, including fake bitcoin exchanges, bitcoin investment scams and blackmail emails.

In June 2019 Kaspersky Africa released the findings of its Cryptocurrency Report 2019, which highlighted that scammers are taking advantage of the lack of awareness and knowledge around cryptocurrencies.

The company stated that fraudsters can use cryptocurrencies to their advantage, with around 5% of those surveyed in South Africa saying they have experienced hacking attacks on exchanges.

"Criminals also create fake e-wallets to attract people to unwisely invest their money, and 16% of South African consumers have been victims of cryptocurrency fraud," said Bethwel Opil, Enterprise Sales Manager at Kaspersky Africa.

On a global level, over 80% of respondents have never used cryptocurrencies underlining the low penetration for digital currencies. Only 10% said they understood how these digital currencies work, with 35% viewing it as a fad.

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