More than 46,000 people have lost more than $1 billion to crypto scams since the beginning of 2021, the Federal Trade Commission said in a report released Friday. That’s about a quarter of the total revenue lost to fraud, but it’s also the largest using payment methods.
2021 has been a pretty good year for cryptocurrencies. By November, various altcoins had collectively reached $3 trillion in market share, more than Apple, Microsoft, or Tesla achieved individually. The lure of bitcoin’s rise was also milked by scammers, who pocketed over $1 billion in the year alone.
Social media fuels the scams
According to the FTC report, social media platforms played a huge role in increasing the reach of these scams, with nearly half of the reported scams starting out as an ad, post, or message on social media.
With a 32% share, Instagram topped the list of social media platforms that helped spread these scams, with parent company Meta’s other social media app, Facebook, coming a close second at 26%. Metas WhatsApp completed the podium with 9%. share, and Telegram was responsible for about 4% of crypto scams.
Investment, Romance, Crypto
Most people are attracted to scams by offering unexpected profits on their cryptocurrency holdings. Up to $575 million in investor funds were lost to cryptocurrency investment scams, where the scammer disappeared after promising quick & easy cryptocurrency profits.
The swindling in-these scams is quite sophisticated, with “investment apps & websites” also allowing investors to track the growth of their cryptocurrency holdings. Others also allow investors to make small withdrawals to prove the platform’s legitimacy, but the scam is discovered when the investor wants to withdraw, the FTC said on its website.
Although not as popular as investment scams, romance scams rank as the second most common way to scam cryptocurrency holders. Almost one in three dollars lost in crypto scams was lost to a love scam in 2021, with an estimated loss of $185 million.
While the newfound love of the internet has people asking about cryptocurrencies in the past, there are also those that involve crypto investing tips. Needless to say, altcoins entered after these requests head to a scammer’s wallet, never to be seen again. The average fraud in this area is a staggering $10,000, the highest of any deployed method.
Organizations & governments impersonations come third on the FTC list, where the gullible are urged to convert their assets into cryptocurrencies to avoid being frozen. The new holdings are being stacked for security reasons, but the real owners will never see them again. The FTC reports that $133 million was lost this way in 2021.
Scammers are taking advantage of people’s unfamilarity of cryptocurrencies and how they work to fund their own coffers. Without a central authority to flag suspicious transactions or prevent fraud from occurring or a system to reverse a fraudulent transaction, scammers have a free rein, the FTC said in its report.