Crypto Scams Cost People More Than $1 Billion Since 2021: FTC

The crypto market can be volatile, but it still attracts young people with “higher risk appetites,” said SharpRank’s Chris Adam.

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More than 46,000 people say they’ve lost over $1 billion in crypto to scams since early 2021, according to a report released by the Federal Trade Commission on Friday.

Losses over the past year have been nearly 60 times what they were in 2018, with a median single loss of $2,600.

The FTC notes that the top cryptocurrencies used to pay scammers were bitcoin (70%), tether (10%), and ether (9%).

A key feature of cryptocurrencies like Bitcoin is that payment transfers are final and cannot be reversed. That’s not always good. Chargebacks – a form of consumer protection tool – allow consumers to reverse a transaction if they claim they were fraudulently charged for a good or service they did not receive.

Almost half of the people who said they lost crypto to a scam since 2021 said it started with some kind of message on a social media platform. The platforms most frequently mentioned in these complaints were Instagram (32%), Facebook (26%), WhatsApp (9%) and Telegram (7%).

Fake investment opportunities were by far the most common type of scam. In 2021, the FTC reported $575 million in crypto fraud losses related to investment opportunities. People reported that investment websites and apps would allow them to track their crypto’s growth, but the apps were fake and when they tried to get their money out, they couldn’t.

“There is no bank or other centralized agency that flags suspicious transactions and tries to stop fraud before it happens,” the FTC warns in its report. “These considerations don’t just apply to crypto transactions, but they all play into the hands of scammers.”

Romance Scam are the second most common source of crypto fraud losses, followed by Identity fraud for companies and authoritieswhich, according to the FTC, can often begin with fake news pretending to be from tech companies like Amazon or Microsoft.

Younger consumers were more likely to fall for crypto scams. The FTC reports that people aged 20 to 49 are more than three times as likely as older age groups to report losing crypto to a scammer.

To avoid scams, the FTC says people should understand that cryptocurrency investments never have guaranteed returns, avoid business deals that require a crypto purchase, and be wary of romantic pick-ups that are accompanied by a crypto advertisement.

The news comes after a tumultuous couple of weeks in the crypto markets. A failed USD-pegged stablecoin helped drag down the entire crypto asset class, erasing half a trillion dollars from the sector’s market cap and undermining investor confidence in the process. Many institutional and retail investors have been wiped out, and for the most part, there are no backstops from the FDIC or other consumer insurance.

Billionaire Bitcoiners Cameron and Tyler Winklevoss recently announced layoffs at crypto exchange Gemini, citing the fact that the industry is in a “contractionary phase” known as “crypto winter” that is being “driven by the current macroeconomic… and geopolitical turmoil was exacerbated”.

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