Crypto: 46,000 people lost $1 billion in 15 months
The euphoria around cryptocurrencies in 2021 hasn’t just made millionaires and billionaires.
It was also a ruin for thousands of retail investors.
And things have not been looking up since the beginning of 2022, the crypto scams, which have multiplied in the last year, continue.
Since the start of 2021, more than 46,000 people have reported losing more than $1 billion in crypto to scams, according to a new report from the Federal Trade Commission (FTC). That’s about one in four dollars reported lost, more than any other payment method.
The median loss reported by an individual is $2,600.
The top cryptocurrencies people reported using to pay scammers were Bitcoin (70%), the king of crypto, stablecoin Tether (10%) and Ether (9%), the second largest crypto by market value.
The agency says crypto has become “an extremely common method for scammers to get people’s money.”
“Crypto has several characteristics that attract scammers, which may help explain why reported losses in 2021 were nearly sixty times what they were in 2018,” the FTC said.
First, there is no bank or other centralized authority to flag suspicious transactions and attempt to stop fraud before it happens.
Second, when the cryptographic transfer is made, it cannot be reversed.
Third, people still don’t know how crypto works.
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The report also singles out ads and social media as the perfect pair that makes life easier for scammers.
“Almost half of people who said they lost crypto to a scam since 2021 said it started with an announcement, post or message on a social media platform.”
“During this period, nearly four in ten dollars reported lost to social media fraud were lost in crypto, far more than any other form of payment.”
In order, scammers were luckiest on Instagram (32%), followed by Facebook (26%), WhatsApp (9%) and Telegram (7%).
The most common type of crypto fraud was investment scams, followed by romance – with $185 million in cryptocurrency losses reported since 2021, or nearly one in three dollars reported lost to a romance scam during this period – commercial impostors, and then government imposters.
Since 2021, $575 million of all crypto fraud losses reported to the FTC were from bogus investment opportunities.
“The stories people share about these scams paint a perfect storm: bogus promises of easy money coupled with people’s limited understanding and experience of crypto. Investment scammers claim they can quickly and easily achieve huge returns for investors from a scammer’s portfolio,” the report states.
When it comes to romance scams, scammers would brag about their supposed wealth and sophistication: “In a short time, they casually offer advice on how to start investing in crypto and help make investments.”
According to the FTC, the median individual reported loss of crypto to romance scammers is $10,000.
The regulator says here are the things to know to avoid the downsides of crypto:
- Only scammers will guarantee profits or big returns. No cryptocurrency investment is ever guaranteed to make money, let alone a lot of money.
- No one legit will ask you to buy cryptocurrency. Not to fix a problem, not to protect your money. It’s a scam.
- Never mix online dating and investment advice. If a new love wants to show you how to invest in crypto or asks you to send him crypto, it’s a scam.