Since the beginning of 2021, more than 46,000 people have contacted the Federal Trade Commission (FTC) with cryptocurrency-related fraud cases. The US trade authority, which is also responsible for consumer protection, put the loss at more than one billion dollars. On average, the loss is therefore around 2600 US dollars per person. The older the age, the greater the loss, reports the FTC.
Poor understanding of cryptocurrencies and technology
Almost half of the reported fraud and loss cases were initiated via social media – led by Instagram with 32 percent and followed by Facebook (26 percent), Whatsapp (9 percent) and Telegram (6 percent). Since 2021, the agency has reported $575 million in investment fraud losses, “far more than any other type of fraud.” According to the FTC, the majority of those affected were people with little understanding of cryptocurrencies and the associated technology, who had fallen for fake apps and websites.
Some of the victims reported that “test withdrawals of sufficient size” beforehand encouraged confidence and made them invest larger amounts afterwards. In second place came fraud about supposed partnerships – romance and love – with almost every third dollar flowing into the pockets of the “keyboard Casanovas”. These posed as wealthy and provided tips and support for investing in cryptocurrencies. Victims of this scam lost an average of $10,000. Total damage was $185 million.
The “friendly agent” next door
Criminals stole another $133 million in cryptocurrencies using identity fraud. In some cases, they posed to victims as Amazon employees, suggesting that the victim had fallen victim to a large-scale scam and that their money was at risk—which was subsequently the case. Others posed as border guards who have frozen victims’ accounts in drug trafficking investigations, saying the only way to protect one’s money is to convert it to cryptocurrency.
The friendly “agent” instructed the deceived to pick up cash from the bank and deposit it at a crypto ATM. After that, the “agent” kindly provided a QR code, which the alleged drug dealers only had to hold up to the machine’s camera, after which the cash was gone and the cryptocoins were safely stored – in the scammer’s wallet. The Mediamarkt-Saturn Group has recently been testing vending machines in three German stores where customers can buy Bitcoin and Ether for cash.
Guaranteed profits and great returns
According to the FTC, most criminals stole bitcoins (70 percent), followed by tether (10 percent) in second place and ether (9 percent). One in four dollars reported lost has been stolen through cryptocurrency-related scams.
The FTC sees a possible justification in the – not explained in more detail – “attractive features” of cryptocurrencies for citizens and the lack of monitoring by institutions. Scammers lure with guaranteed profits and big returns, the FTC explains. Crypto transfers cannot be reversed, there are no central authorities or banks that could monitor and stop suspicious transactions – the money is gone. The reported losses in 2021 were almost sixty times higher than three years earlier.
The FTC provides additional tips to protect yourself from cryptocurrency scams:
Guaranteed profits and big returns come exclusively from scammers. No one reputable will ask you to buy cryptocurrencies to solve a problem or protect your money. Never mix online dating with investment advice. If a new love wants to show you how to invest in cryptocurrencies or asks you to send her crypto coins, that’s a scammer.
These tips from the US Trade Commission should be heeded by potential victims worldwide.
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