More than 46,000 people claim to have lost more than $1 billion in crypto to scams since the start of 2021, according to a report released Friday by the Federal Trade Commission.
Losses last year were almost 60 times greater than in 2018, with a median individual loss of $2,600.
The FTC notes that the top cryptocurrencies people said they 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 a good thing. Chargebacks – a type of tool designed to protect consumers – allow consumers to reverse a transaction if they claim to have been fraudulently charged for a good or service they did not receive.
Nearly half of people who said they lost crypto to a scam since 2021 said it started with some kind of post on a social media platform. The main platforms 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, $575 million in crypto fraud losses reported to the FTC were related to investment opportunities. People reported that investment websites and apps let them track their crypto growth, but the apps were fake, and when they tried to withdraw their money, they couldn’t.
“There is no bank or other centralized authority to flag suspicious transactions and attempt to stop fraud before it happens,” the FTC warns in its report. “These considerations are not unique to crypto transactions, but they all play into the hands of scammers.”
Romance scams are the second most common source of crypto fraud losses, followed by corporate and government impersonation scams, which the FTC says can often start with fake messages claiming to be from tech companies like Amazon or Microsoft.
Younger consumers were more likely to be duped by crypto scams. The FTC reports that people between the ages of 20 and 49 were more than three times more likely than older age groups to report losing crypto to a scammer.
To avoid being scammed, according to the FTC, people should understand that cryptocurrency investments never have a guaranteed return, avoid business arrangements that require a purchase of crypto, and be careful of come- Romantic ons accompanied by a crypto solicitation.
The news comes after a tumultuous few weeks in the crypto markets. A US dollar-pegged stablecoin helped drag the entire crypto asset class down, wiping half a trillion dollars off the sector’s market capitalization and undermining investor confidence in the process. Many institutional and retail investors have been wiped out, and for the most part there are no FDIC backstops or other consumer insurance protections.
Billionaire bitcoiners Cameron and Tyler Winklevoss recently announced layoffs at crypto exchange Gemini, citing that the industry is in a “contraction phase” known as “crypto winter,” which has been “still compounded by the current macroeconomic and geopolitical turmoil”.
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Crypto Scams Cost People Over $1 Billion Since 2021: FTC
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