In 2021, about half of the customers who reported a cryptocurrency-related fraud stated it began with a social media ad, post, or message.
According to the US Federal Trade Commission, social media and cryptocurrency are a “combustible mix for fraud,” with social media platforms accounting for over half of all crypto-related frauds in 2021.
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The research, which was released on Friday, indicated that fraudsters stole up to $1 billion in cryptocurrency this year, a more than five-fold rise from 2020 and over sixty-fold increase from 2018.
New analysis finds consumers reported losing more than $1 billion in #cryptocurrency to scams since 2021. Most of the losses consumers reported were to bogus cryptocurrency investment scams: https://t.co/MYGTcaw1aS #DataSpotlight /1
— FTC (@FTC) June 3, 2022
The amount of cryptocurrency lost as of March 31 was already reaching half of the projection for 2021, indicating that progress isn’t slowing.
The top platforms utilized for crypto frauds, according to the FTC, were Instagram (32%), Facebook (26%), WhatsApp (9%), and Telegram (7%).
Interestingly, despite being clogged with spam and scam bots pushing fraudulent coin giveaways, Twitter, the social media medium commonly used by the crypto-community, was not listed.
Investment Related Fraud was the most prevalent form of crypto scam, accounting for $575 million of the total $1 billion in fraud reports to the FTC’s Consumer Sentinel Network.
People have reported losing all of the money they ‘invested’ in these frauds, which falsely promise potential investors that they can earn enormous returns by participating in their bitcoin schemes.
According to the FTC, frequent investment scams involve a so-called “investment manager” contacting a client and promising to increase their money if the consumer purchases cryptocurrencies and deposits it into an online account.
Impersonating a celebrity who can multiply any bitcoin sent to them or promising free cash or cryptocurrency are two other tactics.
Scams involving investment in false art, diamonds, and rare coins, phony investment seminars and advice, and other miscellaneous financial scams are also included in this category, according to the FTC.
Romance Scams, with $185 million in losses, were the second highest crypto-fraud-related losses, in which a love interest tries to persuade someone into investing in a crypto scam.
Impersonation in the workplace and in government Scams came in third place with a total of $133 million, with scammers stating that their money is in jeopardy owing to fraud or a government probe.
These scams might begin with a text message about an allegedly unlawful Amazon transaction or a frightening internet pop-up that seems to be a Microsoft security notice. People are allegedly warned that the fraud is widespread and that their money is at risk after that.
The fraudsters will next pose as a bank employee in order to secure the victim’s cryptocurrency.
In other occasions, con artists have pretended to be border patrol officials, telling victims that their fiat accounts have been frozen as part of a drug-trafficking probe. These con artists persuade consumers that the only way to keep their money safe is to save it in cryptocurrency. They’re told to withdraw cash and deposit it in a crypto ATM, but they’re duped into transferring the money to the scammers’ wallet address instead.
People in their 20s–49s were the most likely to lose crypto to a fraudster, with those in their 30s being the heaviest impacted, accounting for 35% of all reported fraud losses.
The amount of bitcoin lost increases with age, with the median individual recorded cryptocurrency losses for those in their 70s reaching $11,708, compared to just $1,000 for those in their 18s and 19s.
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A variety of techniques to avoid cryptocurrency frauds are detailed in an article on the FTC’s Consumer Advice website:
- Scammers are the only ones that demand payment in cryptocurrencies. No respectable business will ask you to transmit cryptocurrencies ahead of time – not to buy something, and certainly not to secure your funds. It’s always a ruse.
- Profits or large returns are only guaranteed by crooks. Don’t believe anyone who claims to be able to generate money in the crypto markets rapidly and effortlessly.
- Never combine online dating with financial advice. It’s a fraud if you meet someone on a dating site or app who wants to teach you how to invest in cryptocurrency or asks you to transfer them cryptocurrency.