The US Federal Trade Commission (FTC) has warned that people have reported losing over $1 billion in crypto to scams since the beginning of 2021. The vast majority of these losses were due to investment scams, in which people are tricked into buying cryptocurrency with the promise of a large return. Notably, younger people (aged 20 to 49) are more than three times as likely to fall for cryptocurrency scams than older people. When older people do fall for these scams, however, they tend to lose more money.
“Of the reported crypto fraud losses that began on social media, most are investment scams,” the FTC says. “Indeed, since 2021, $575 million of all crypto fraud losses reported to the FTC were about bogus investment opportunities, far more than any other fraud type. The stories people share about these scams describe a perfect storm: false promises of easy money paired with people’s limited crypto understanding and experience. Investment scammers claim they can quickly and easily get huge returns for investors. But those crypto ‘investments’ go straight to a scammer’s wallet. People report that investment websites and apps let them track the growth of their crypto, but it’s all fake. Some people report making a small ‘test’ withdrawal – just enough to convince them it’s safe to go all in. When they really try to cash out, they’re told to send more crypto for (fake) fees, and they don’t get any of their money back.”
The FTC offers the following tips to help people recognize cryptocurrency scams:
- “Only scammers will guarantee profits or big returns. No cryptocurrency investment is ever guaranteed to make money, let alone big money.
- “Nobody legit will require you to buy cryptocurrency. Not to sort out a problem, not to protect your money. That’s a scam.
- “Never mix online dating and investment advice. If a new love interest wants to show you how to invest in crypto, or asks you to send them crypto, that’s a scam.”