More than $ 1 billion was lost in crypto scams last year as per a report from FCT

Cryptocurrency has been in the news lately, with anything from Super Bowl advertising to Bitcoin ATMs. Even though it hasn’t yet gained widespread acceptance as a payment mechanism, reports to the FTC suggest that scammers frequently use it to steal people’s money. More than any other payment method, a total of $46,000 people have reported losing more than $1 billion in cryptocurrency to scammers since 2021. 

The average per-person sum totals $2,600. 70% of scam victims indicated they used Bitcoin, Tether, and Ethereum to pay criminals.

Scammers may be drawn to cryptocurrency because of its appealing characteristics, which explains why losses reported in 2021 were approximately sixty times more than in 2018. 

Nobody has the power to detect questionable transactions and prevent fraud before it occurs. Once a cryptocurrency transfer has been made, it cannot be undone. And the vast majority of folks have no idea how crypto works. Scammers take advantage of them.

The mix of social media and cryptocurrency is a recipe for disaster. An advertisement, post, or message on a social media network was the starting point for more than half of the people who have reported losing cryptocurrency since 2021.

Social media scams

Cryptocurrency accounted for approximately four out of every ten dollars reported as having been lost to fraud, and these scams started on social media. According to the study, the most popular social media sites were Instagram (32 %), Facebook (26 %), WhatsApp (9 %), and Telegram (7 %).

The FTC has received $575 million in reports of phony investment offerings, significantly more than any other fraud. 

crypto scams
Source: ftc.gov

Scammers take advantage of people’s lack of crypto knowledge and experience to lure them in with false promises of quick money. 

People say that they can monitor the progress of their cryptocurrency on investment websites and applications, but this is all a hoax. It’s not uncommon for folks to report making a little “test” withdrawal before going all in. As soon as they try to cash out, they’re told to submit more cryptocurrency for (false) fees, and they don’t get any of their money back.

crypto frauds
Top 3 main types of frauds. Source: ftc.gov

 

Romance frauds

Almost one out of every three dollars that have been lost in investment scams has been lost to romance frauds.

Many of them also include an investment component. The perpetrators show grandeur and bling they claim have obtained through crypto investments. Before long, they casually offer tips on getting started with crypto investing and help with making investments. 

As a result, those who accept the offer report that they received instruction on sending cryptocurrency to a scammer instead. The average amount of money lost to romance fraudsters is $10,000.

 

Impersonation scams

Impersonation frauds involving businesses and governments are the next most common, resulting in $133 million in bitcoin. 

Scams can begin with a text warning that an Amazon transaction was made without your permission or with a frightening web pop-up that appears to be from Microsoft. People are then allegedly informed that the fraud is widespread and that their money is in jeopardy. Even the “bank” could be used as a pawn in the fraud. (It’s not the bank, by the way.) 

Moreover, scammers posing as border patrol agents have reportedly threatened to freeze people’s bank accounts as part of a drug-trafficking probe. “Agents” claim that the only way they can keep their customers’ money safe is by directing them to withdraw cash and deposit it into a crypto ATM. 

They then send a QR code and instruct the recipient to hold it up to the ATM camera, which is what they are doing. However, the scammer’s wallet address is included in the QR code. Their money is gone as soon as the machine scans it.

 

Young people lose more

More than three times as many people in the 20-49 age bracket reported losing cryptocurrency to a fraudster as those in the 50+ age bracket. People in their 30s have been the most affected by cryptocurrency fraud, with 35 percent of their reported losses since 2021 coming from virtual currency. 

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