Not everyone who took a leap with cryptocurrency lives to tell a success story.
Over 46,000 people have collectively lost $1 billion in cryptocurrency to scams since the start of 2021, according to a report by the United States Federal Trade Commission (FTC).
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This accounts for a median loss of $2,600 per individual. Moreover, people report losing around one of every four dollars, more than any other payment method.
“From Super Bowl ads to Bitcoin ATMs, cryptocurrency seems to be everywhere lately. Although it’s yet to become a mainstream payment method, reports to the FTC show it’s an alarmingly common method for scammers to get peoples’ money,” read the commission’s Data Spotlight report dated June 2022.
In fact, reported losses in 2021 are nearly 60 times as much as those recorded just a few years back in 2018.
Respondents said the top cryptocurrencies they used were Bitcoin (70 percent), Tether (10 percent), and Ether (9 percent).
The FTC said cryptocurrency has several features that scammers find attractive.
“There’s no bank or other centralized authority to flag suspicious transactions and attempt to stop fraud before it happens. Crypto transfers can’t be reversed once the money’s gone, there’s no getting it back. And most people are still unfamiliar with how crypto works. These considerations are not unique to crypto transactions, but they all play into the hands of scammers,” the report read.
Red flags
Nearly half of cryptocurrency scam victims said it started with an ad, post, or message on a social media platform.
Top social networks identified in such incidents include Instagram (32 percent), Facebook (26 percent), WhatsApp (9 percent), and Telegram (7 percent).
“The stories people share about these scams describe a perfect storm. False promises of easy money paired with people’s limited crypto understanding and experience. Investment scammers claim they can quickly and easily get huge returns for investors. But those crypto ‘investments’ go straight to a scammer’s wallet,” the FTC identified a major red flag.
The report finally advises the public that only scammers will guarantee profits or big returns, nobody legit will require one to buy cryptocurrency, and to never mix online dating and investment advice.
Banner Photo by André François McKenzie on Unsplash
