Cryptocurrency Scams Rise 500% In 2020

A SCARS Scam Warning

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Cryptocurrency Investment Scam Reports At Record Level:

The Facts That Suggest Caution

Since October 2020, consumers have reported losing more than $80 million to cryptocurrency investment scams, an increase of more than ten-fold year-over-year, according to a new data analysis from the Federal Trade Commission.

The FTC notes that cryptocurrency investment scams take on a variety of forms, sometimes starting as offers of investment “tips” or “secrets” in online message boards that lead people to bogus investment websites. Another common form of the scam involves a promise that a celebrity associated with cryptocurrency will multiply any cryptocurrency you send to their wallet and send it back. In some cases, scammers will use a romance scam approach to get a victim to trust them before offering the investment opportunity.

In fact, consumers reported losing more than $2 million to Elon Musk impersonators alone since October 2020.

Stop Before Adding Crypto To Your Portfolio

If you are thinking about adding cryptocurrency to your investment portfolio – STOP, THINK, before Acting!

The number of Americans investing in cryptocurrency has increased astronomically, and very few have any idea of the risks.

But as a new FTC Consumer Protection data suggests, the number who report getting stung by cryptocurrency investment scams has skyrocketed.

Here are five facts that suggest caution before sinking your savings into cryptocurrency.

  • Consumers report losing millions to cryptocurrency scams. Since October 2020, nearly 7,000 consumers have reported (as we know this is the tip of the iceberg) losses to cryptocurrency scams totaling more than $80 million with a reported median loss of $1,900. Compared to the same period a year earlier, that’s about 12 times the number of reports and nearly 1,000% more in reported losses. Remember, that most people do not report these crimes, so the belief is that the real numbers are about 25 times higher.
  • Cryptocurrency scammers blend into the scene. Cryptocurrency enthusiasts tend to congregate online to talk about their shared interest. But reports from defrauded consumers suggest that some sites can raise concerns. Is the author of that post just a friendly person sharing an investment “tip” or is he or she part of a ploy to draw consumers into a scam? Prospective investors also need to take supposed “success stories” from endorsers with a hearty helping of skepticism. There’s no way to verify they’re telling the truth. Pay attention to traditional investment news sources as well.
  • A celebrity’s name is no guarantee of legitimacy. Crypto crooks may try to cover their con by stealing the name of a newsmaker or business leader – for example, by falsely claiming the celebrity will “multiply” the cryptocurrency a consumer sends. Case in point: In just the past six months, people have reportedly sent more than $2 million in cryptocurrency to Elon Musk impersonators.
  • (Cyber) romance and (crypto) finance can be a combustible combination. Fraudsters have been known to use the artifice of long-distance love to gain a person’s trust only to reel them into a cryptocurrency investment scam. According to the FTC data, about 20% of the money people reported losing through romance scams since October 2020 was sent in the form of cryptocurrency – and many of them thought they were making an investment recommended by their supposed sweetheart.
  • Younger investors may be at particular risk. Since October 2020, people between 20 and 49 were over five times more likely to report losing money to cryptocurrency investment scams than older consumers. What’s more, those in their 20s and 30s reported losing far more money on investment scams than on any other type of fraud – and more than half of their reported investment scam losses were in cryptocurrency. But that doesn’t mean that consumers over 50 weren’t affected, too. Members of that age group were far less likely to report losing money on cryptocurrency investment scams. However, when they did lose money, their individual losses were higher, with a reported median loss of $3,250.

Even sophisticated business people have been taken in by cryptocurrency investment scams and there are specific tips on protecting yourself. For more information about cryptocurrency scams, visit ftc.gov/cryptocurrency. If you spot a scam, report it to us at ReportFraud.ftc.gov.

In a new consumer protection data spotlight, the FTC breaks down the contents of nearly 7,000 reports received from consumers about these scams in the last quarter of 2020 and the first quarter of 2021. The median amount consumers reported losing to the scams was $1,900.

From The Federal Trade Commission

Investing in cryptocurrency means taking on risks, but getting scammed shouldn’t be one of them. Reports to the FTC’s reporting platform suggest scammers are cashing in on the buzz around cryptocurrency and luring people into bogus investment opportunities in record numbers. Since October 2020, reports have skyrocketed, with nearly 7,000 people reporting losses of more than $80 million on these scams. Their reported median loss? $1,900. Compared to the same period a year earlier, that’s about twelve times the number of reports and nearly 1,000% more in reported losses.

Some say there’s a Wild West vibe to the crypto culture, and an element of mystery too.

Cryptocurrency enthusiasts congregate online to chat about their shared passion. And with bitcoin’s value soaring in recent months, new investors may be eager to get in on the action. All of this plays right into the hands of scammers. They blend into the scene with claims that can seem plausible because cryptocurrency is unknown territory for many people. Online, people may appear to be friendly and willing to share their “tips.” But that can also be part of the ruse to get people to invest in their scheme. In fact, some of these schemes are based on referral chains, and work by bringing in people who then recruit new “investors.”

Many people have reported being lured to websites that look like opportunities for investing in or mining cryptocurrencies but are bogus.

They often offer several investment tiers – the more you put in, the bigger the supposed return. Sites use fake testimonials and cryptocurrency jargon to appear credible, but promises of enormous, guaranteed returns are simply lies. These websites may even make it look like your investment is growing. But people report that, when they try to withdraw supposed profits, they are told to send even more crypto – and end up getting nothing back.

Giveaway Scams

Then, there are “giveaway scams,” supposedly sponsored by celebrities or other known figures in the cryptocurrency space, that promise to immediately multiply the cryptocurrency you send. But, people report that they discovered later that they’d simply sent their crypto directly to a scammer’s wallet. For example, people have reported sending more than $2 million in cryptocurrency to Elon Musk impersonators over just the past six months.

Romance Lures

Scammers even use online dating to draw people into cryptocurrency investment scams. Many people have reported believing they were in a long-distance relationship when their new love started chatting about a hot cryptocurrency opportunity, which they then acted on. About 20% of the money people reported losing through romance scams since October 2020 was sent in cryptocurrency, and many of these reports were from people who said they thought they were investing.

Age Breakdown

Since October 2020, people ages 20 to 49 were over five times more likely to report losing money on cryptocurrency investment scams than older age groups.5 The numbers are especially striking for people in their 20s and 30s: this group reported losing far more money on investment scams than on any other type of fraud,6 and more than half of their reported investment scam losses were in cryptocurrency. In contrast, people 50 and older were far less likely to report losing money on cryptocurrency investment scams. But when this group did lose money on these scams, their reported individual losses were higher, with a median reported loss of $3,250.

Send Crypto

To be clear, while investment scams top the list as the most lucrative way to obtain cryptocurrency, scammers will use whatever story works to get people to send crypto. That often involves impersonating a government authority or a well-known business. For example, many people have told the FTC they loaded cash into Bitcoin ATM machines to pay imposters claiming to be from the Social Security Administration. Others reported losing money to scammers posing as Coinbase, a well-known cryptocurrency exchange. In fact, 14% of reported losses to imposters of all types are now in cryptocurrency.

Crypto Safety Tips

Here are some things to know to play it safe(er) when it comes to cryptocurrency:

  • Promises of guaranteed huge returns or claims that your cryptocurrency will be multiplied are always scams.
  • The cryptocurrency itself is the investment. You make money if you’re lucky enough to sell it for more than you paid. Period. Don’t trust people who say they know a better way.
  • If a caller, love interest, organization, or anyone else insists on cryptocurrency, you can bet it’s a scam.

The Key

Crypto is complex and not as understandable as stocks or bonds. Do not invest in something you do not understand. If you cannot clearly understand it, avoid it!