Nearly half of consumers who reported a cryptocurrency scam in 2021 said it started with an ad, post, or message on social media.
The United States Federal Trade Commission has called social media and cryptocurrencies a “combustible combination for fraud,” with nearly half of cryptocurrency-related scams originating from social media platforms in 2021.
Released on Friday, the report found that up to $1 billion in cryptocurrency has been lost to scammers over the year, which was a more than five-fold increase from 2020, and almost sixty-fold from 2018.
As of March 31, the amount of crypto lost was already approaching half of the 2021 figure, showing that the momentum does not seem to be slowing down.
FTC Report Highlights
The FTC found that Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%) were the top platforms used for crypto scams.
Interestingly, Twitter, the social network widely adopted by the crypto community, was not mentioned despite being riddled with spam and scam bots promoting fake cryptocurrency giveaways.
According to fraud reports submitted to the FTC’s Consumer Sentinel Network, the most common type of cryptocurrency scam was investment-related fraud, accounting for $575 million of the total $1 billion figure.
The most common investment scams include cases where a consumer is contacted by a so-called “investment manager”, promising to grow their money, but only if the consumer purchases cryptocurrency and transfers it to their online account.
Other methods include posing as a celebrity who can multiply any cryptocurrency a consumer sends him or promise free cash or cryptocurrency.
The FTC also lists scams involving investment in fake art, rare gems and coins, bogus investment advice and seminars, and other miscellaneous investment scams as part of this group.
The next largest crypto-related losses come from romance scams, at $185 million, in which a love interest tries to entice someone to invest in a crypto scam.
Business and government impersonation scams came in third, totaling $133 million, in which scammers target consumers, claiming their money is at risk due to fraud or a government investigation.
In other cases, scammers have posed as border patrol agents to tell people their fiat accounts are frozen as part of a drug-trafficking investigation. These scammers tell people that the only way to protect their money is to transfer it to cryptocurrencies. They direct them to withdraw cash into a cryptocurrency ATM and trick them into sending it to the scammers’ wallet address.
The report reveals that people between the ages of 20 and 49 are the most likely to lose cryptocurrency to a scammer, with those in their 30s the hardest hit, accounting for 35% of all reported fraud losses.
The amount of lost cryptocurrencies increases depending on the age group; Median reported cryptocurrency losses for those in their 70s run as high as $11,708, compared to just $1,000 for 18- and 19-year-olds.
FTC Advice – How to Avoid Cryptocurrency Scams
An article on the FTC’s consumer advice website details a number of ways to avoid cryptocurrency scams:
Only scammers demand payment in cryptocurrencies. No legitimate business is going to require you to send crypto in advance, either to buy something or to protect your money. That is always a scam.
Only scammers guarantee profits or big profits. Do not trust people who promise you that you can make money quickly and easily on the cryptocurrency markets.
Never mix online dating with investment advice. If you meet someone on a dating site or app, and they want to show you how to invest in cryptocurrency or ask you to send them cryptocurrency, that’s a scam.
By Audy Castaneda
