Social media blamed for $1B in crypto scam losses in 2021

The United States Federal Trade Commission has labeled social media and crypto a “flamable mixture for fraud,” with almost half of all crypto-related scams originating from social media platforms in 2021.

Published on Friday, the report discovered that as a lot as $1 billion in crypto has been misplaced to scammers all year long, which was greater than a five-fold improve from 2020, and almost sixty instances up from 2018.

As of March 31, the quantity of crypto misplaced was already approaching half of the 2021 determine, exhibiting that momentum doesn’t seem like slowing.

The FTC discovered that Instagram (32%), Facebook (26%), WhatsApp (9%) and Telegram (7%) have been the highest platforms used for crypto scams.

Interestingly, Twitter, the social media platform extensively adopted by the crypto-community, was not talked about regardless of being suffering from spam and scam bots touting faux crypto giveaways.

Based on fraud stories to FTC’s Consumer Sentinel Network, the most typical kind of crypto scam was Investment Related Fraud, making up $575 million of the overall $1-billion determine.

“These scams typically falsely promise potential traders that they’ll earn large returns by investing in their cryptocurrency schemes, however individuals report shedding all the cash they ‘make investments.’”

According to the FTC, widespread funding scams embody instances in which a so-called “funding supervisor” contacts a shopper, promising to develop their cash — however provided that the patron buys cryptocurrency and transfers it into their on-line account.

Other strategies embody impersonating a celeb who can multiply any cryptocurrency {that a} shopper sends them or guarantees free money or cryptocurrency.

The FTC additionally lists scams that contain funding in faux artwork, gems and uncommon cash, bogus funding seminars and recommendation, and different miscellaneous funding scams as a part of this group.

The subsequent largest crypto-scam-related losses got here from Romance Scams at $185 million, in which a love curiosity tries to entice somebody into investing in a crypto scam.

Business and Government Impersonation Scams got here in third at a complete of $133 million, in which scammers goal customers, claiming that their cash is in danger because of fraud or a authorities investigation.

“These scams can begin with a textual content a couple of supposedly unauthorized Amazon buy, or an alarming on-line pop-up made to appear to be a safety alert from Microsoft. From there, persons are reportedly informed the fraud is intensive and their cash is in danger.”

The scammers will then faux to be a consultant of the financial institution to safe the individual’s crypto.

In different instances, scammers have impersonated border patrol brokers reportedly telling individuals their fiat accounts are frozen as a part of a drug trafficking investigation. These scammers inform individuals the one strategy to shield their cash is to place it in crypto. They’re directed to take out money and feed it right into a crypto ATM and are tricked into sending it to the scammers’ pockets deal with as a substitute.

The report discovered that folks aged 20–49 have been most definitely to lose crypto to a scammer, with these in their 30s the toughest hit, making up 35% of whole reported fraud losses.

Related: A life after crime: What occurs to crypto seized in legal investigations?

The quantity of crypto misplaced rises up in response to age group, with the median particular person reported cryptocurrency losses for these in their 70s reaching as much as $11,708, in comparison with simply $1,000 for 18- and 19-year-olds.

An article on the FTC’s Consumer Advice website particulars a lot of methods to keep away from cryptocurrency scams:

  • Only scammers demand fee in cryptocurrency. No legit enterprise goes to demand you ship cryptocurrency in advance — to not purchase one thing and to not shield your cash. That’s at all times a scam.
  • Only scammers will assure income or large returns. Don’t belief individuals who promise you may rapidly and simply earn money in the crypto markets.
  • Never combine on-line relationship and funding recommendation. If you meet somebody on a relationship web site or app, they usually wish to present you how you can make investments in crypto or ask you to ship them crypto, that’s a scam.


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