A man was arrested by City of London Police yesterday on suspicion of running a so-called boiler room scam, selling nonexistent cryptocurrencies to investors.

Victims were allegedly sold bitcoins and a ‘fictional cryptocurrency’ by salespeople who cold-called from an address set up in Broad Street in London in an attempt to to make their activities seem legitimate.

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The investigation began following reports made to Action Fraud, the national fraud and cyber reporting service. If proven, it will be the latest in a series of cryptocurrency investment scams uncovered in the UK in recent months.

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The suspect arrested is believed to have been working as part of a group, specialising in following up on introductions made by cold-callers to finalise the fraudulent deals and secure investor’s money.

The City of London Police said: “The man is thought to be part of a group which allegedly set-up a ‘boiler room’ on Old Broad Street (EC2) which has allegedly been used to persuade people to invest in a cryptocurrency. Victims were cold called by salespeople who allegedly persuaded them to invest in a cryptocurrency which does not exist and is therefore worthless.”

So far 9 victims have filed reports, but detectives have contacted many who were not aware they had been victims of fraud. Their combined estimated losses amount to approximately £160,000.

The term ‘boiler room’ refers to a type of fraud that involves contacting customers unsolicited, often by telephone, offering to sell them exotic financial products. Although the boiler rooms often claim to be authorized service providers with professional websites and forms to fill out, they are in reality swindlers that offer fictitious or worthless investments.