Cryptocurrency exchanges have a growing responsibility to protect their users from scams, especially the elderly who may be less familiar with technology. Adrian Przelozny, CEO of Independent Reserve, a leading crypto exchange, highlighted this need in a recent interview. He shared how the exchange takes extra precautions to safeguard its users, particularly those over 65.
“If we see an 80-year-old making a crypto withdrawal, they are going to get a call,” said Przelozny, explaining that the exchange has a team dedicated to calling users if they notice any suspicious activity. This team’s primary goal is to prevent potential scams by questioning unusual transactions, particularly those made by older users.
Przelozny pointed out that older individuals are more vulnerable to scams because they might not be as comfortable with the internet and digital technology. This vulnerability has made it essential for the exchange to actively monitor and engage with its users to ensure they are not being targeted by fraudsters.
However, the problem isn't limited to the elderly. In the United Kingdom, younger individuals aged 25-34 have also been identified as a group at high risk of falling for crypto scams. A report by Lloyds Bank in November 2023 revealed that this age group makes up about a quarter of all crypto scam victims in the country.
Independent Reserve's approach involves a dedicated compliance department that continuously monitors for suspicious activities. When a pattern resembling known scam behaviors is detected—such as frequent small deposits or withdrawals—the team contacts the user. They ask questions like, “Did someone ask you to open an account with Independent Reserve?” This line of questioning often helps the user realize they might be falling victim to a scam.
Despite the team's best efforts, not all users are easily convinced. Some victims remain defensive, believing they are on the verge of a lucrative opportunity. Przelozny noted that the compliance team must sometimes act decisively, even if the user is unaware they are being scammed. In cases where the team is confident that a scam is occurring, they may freeze the account to prevent further losses.
Interestingly, Przelozny also highlighted that people from lower-income areas are more susceptible to crypto scams. He suggested that individuals from these areas might be more inclined to take financial risks in the hope of quickly improving their situation.
The actions of Independent Reserve's compliance team reflect a broader effort within the crypto industry to protect users from scams, which are becoming increasingly common. The Australian Federal Police reported that in the past year, Australians lost $269 million to investment scams, with nearly half of these being crypto-related.
Independent Reserve’s proactive approach serves as a model for other exchanges to follow, ensuring that users, especially the vulnerable, are protected in the rapidly evolving world of cryptocurrency.
