At the start of the year 2021, over 46,000 people have been victims of cryptocurrency scams, according to CNN. A recently released report from the Federal Trade Commission says that over $1 billion were stolen from these victims.
The FTC warns people that about one out of every four dollars is reportedly lost to these fraudsters. They say this has overtaken all other payment methods, with the median individual losing approximately $2,600. Scammers were paid by 70% of these victims, mainly in Bitcoin, followed by Tether and Ether.
They prey on mostly the younger demographics of around 25 to 40 years. They were three times more likely to be duped and lose money due to these cryptocurrency scams.
Related Article: Am I Being Scammed? How to Avoid and Report It
Cryptocurrency Scams Becoming Popular
There is a big difference in the number of these cryptocurrency scams nowadays. It skyrocketed in 2021, more than 60% from the 2018 numbers. This is because scammers have seen an advantage in the following:
- Non-involvement of banks in these suspicious activities
- Irreversible transfers
- Beginner investors with little to no knowledge of how the cryptocurrency works
The FTC has raised the alarm bells at a time when the crypto market is at its most volatile. When Bitcoin peaked its price at $69,000 in November last year, it lost more than half its value. This resulted in investors pulling out because of the rising interest rates.
How Victims Fell
Those who reported being victimized by these cryptocurrency scams said they were enticed using social media platforms and other online posts or messages. Most of these scammers ply their route on Facebook and Instagram.
According to the FTC, more than $575 million of the cryptocurrency losses were from fake investment opportunities. Other fraud types are pale in comparison. The report noted that the victims share their stories and describe them as the perfect storms.
Most of them are false promises of getting easy money. They capitalize on people’s lack of ample knowledge and understanding of cryptocurrencies. Just this February, the founder of BitConnect was indicted by a federal grand jury in San Diego. This was due to its alleged orchestration of a $2.4 billion global Pozi scheme.
The said founder was accused of deceiving investors into thinking that the cryptocurrency’s lending program was legit. They claim that the proprietary technology of the company will bring them actual returns by way of the monitoring of cryptocurrency exchange markets.
Similarly, the CEO of Mining Capital Coin was indicted in May for their alleged orchestration of a $62 million global investment fraud scheme. The plan was to produce sizable returns from the mining of new cryptocurrencies. Both cases have proven that the scammers promised generous returns. However, the money went straight to their pockets instead of the investors’ crypto wallets.
Combatting the Cryptocurrency Scams
In May of this year, the SEC made an announcement that they were looking for new employees to help stop these cryptocurrency frauds. According to the FTC, they, too, are taking steps to help prevent these scammers from doing their dirty deeds.
The FTC’s first suggested step is to avoid people promising guaranteed results. The agency added that no cryptocurrency investment provides a 100% guarantee that it will make you rich, let alone earn money. Also, valid investments will never require anyone to send payments of cryptocurrencies.
They also warned of mixing online dating with investment advice, saying that it’s most probably a scam when a new love interest wants you to invest in cryptocurrencies. In addition, if all they want is to teach you how to invest in it or that you send them crypto, it is definitely a scam.
