Cryptocurrency scammers have stolen more than $1 billion from 46,000 people since the beginning of 2021, according to a new report from the Federal Trade Commission (FTC).
The FTC sounded the alarm bells on Friday, saying that cryptocurrency-related crimes account for about one in four dollars reported lost to fraud, more than any other payment method. The average individual loss reported was US$2,600.
The vast majority of those who reported being scammed used Bitcoin to pay the scammers, at 70%, followed by Tether and Ether. Victims tend to be part of a younger age group: those between 25 and 40 years old are three times more likely to lose money due to fraud.
Cryptocurrency scams are becoming more and more popular, skyrocketing 60 times more than in 2018. It has all the elements that give scammers an advantage: there is no bank to flag suspicious transactions, irreversible transfers, and novice investors who are often unaware of the cryptocurrency. largely how cryptocurrencies work.
The FTC warning comes at a time of volatility in the cryptocurrency market. Since Bitcoin peaked at $69,000 in November, it has lost more than half its value as investors have pulled out of riskier assets due to rising interest rates.
Nearly half of those who reported losing money to a cryptocurrency scam in 2021 said they had been lured by an online post or social media message. More than half of the posts were viewed on Facebook or Instagram.
Fake investment opportunities were behind $575 million of all cryptocurrency losses reported to the FTC, far more than any other type of fraud.
“The stories people share about these scams describe a perfect storm: bogus promises of easy money paired with people’s limited cryptocurrency knowledge and experience,” the FTC report says.
In February, a federal jury in San Diego indicted the BitConnect founder for orchestrating a $2.4 billion global Ponzi scheme. The founder was accused of misleading investors about the cryptocurrency “loan program,” claiming that the company’s proprietary technology would bring substantial returns to investors by monitoring cryptocurrency exchange markets.
How to avoid falling into a pyramid scam? 0:46And in May, the CEO of Mining Capital Coin was charged with “allegedly orchestrating a $62 million global investment fraud scheme” that promised hefty returns from mining new cryptocurrencies.
In both cases, the scammers promised substantial returns to their investors, but instead pocketed the money in their own crypto wallets.
Last month, the Securities and Exchange Commission (SEC) announced that it was hiring more than a dozen new employees to combat cryptocurrency fraud.
The FTC said you have to take steps to avoid being scammed. The first is to stay away from anyone who promises guaranteed returns.
“No investment in cryptocurrencies is guaranteed to make money, let alone in large amounts,” the FTC said. A legitimate investment will never require you to buy cryptocurrencies, the FTC said.
Romance scams also play a role in this type of fraud, with the average individual losing cryptocurrency being $10,000. The FTC also warned against mixing online dating with investment advice.
“If a new love interest wants to show you how to invest in crypto, or asks you to send them crypto, that is a scam,” the FTC noted.
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