Cryptocurrencies such as bitcoin and ether are not regulated in Britain, and the FCA said it has received a rising number of reports about investment scams that claim to offer high returns.
Cryptocurrency scams are using images of celebrities and upmarket London addresses to hoodwink consumers into parting with cash, Britain's Financial Conduct Authority said on Friday.
Cryptocurrencies such as bitcoin and ether are not regulated in Britain, and the FCA said it has received a rising number of reports about investment scams that claim to offer high returns.
"UK consumers are being increasingly targeted by cryptocurrency-related investment scams," the FCA said in a statement.
"Cryptocurrency fraudsters tend to advertise on social media, often using the images of celebrities or well-known individuals to promote cryptocurrency investments."
The ads link to websites for investments either using cryptocurrencies or traditional cash.
"The firms operating the scams are usually based outside of the UK but will claim to have a UK presence, often a prestigious City of London address," the FCA said.
Given that cryptocurrencies are not regulated, consumers are unlikely to get their money back, and are not protected by the Financial Services Compensation Scheme, the watchdog said.
The Supreme Court of India had also refused to overturn a Reserve Bank of India (RBI) ban on cryptocurrencies, making it impossible for virtual currency players to carry out transactions through Indian banking and payment channels.
A bench headed by Chief Justice Dipak Misra, refused to give interim to relief to the RBI's directive prohibiting banks, financial institutions and other regulated institutions from providing any services related to virtual currencies.
Legal and tax experts believe that it will be quite difficult for cryptocurrency players to operate in the country after the RBI circular came into from July 6.
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